Financial Crime World

Financial Fraud Statistics in Estonia: Two Citizens Arrested for $575 Million Cryptocurrency Scam

In a significant blow to cryptocurrency fraud, two Estonian citizens have been arrested and charged with allegedly defrauding hundreds of thousands of victims out of $575 million through a massive Ponzi scheme.

The Accused

Sergei Potapenko (37) and Ivan Turõgin (37), both from Estonia, were taken into custody in Tallinn after an 18-count indictment was unsealed in the Western District of Washington. The grand jury returned the charges on October 27.

The Scheme

According to court documents, the duo allegedly defrauded victims through a multi-faceted scheme involving:

  • Fraudulent equipment rental contracts
  • Investments in a virtual currency bank called Polybius Bank
  • Promises of dividends from Polybius’ profits, but no actual payments were made

Instead, Potapenko and Turõgin used shell companies to launder their criminal proceeds, purchasing:

  • Real estate around the world
  • Luxury cars
  • Cryptocurrency wallets

Response from Authorities

“We are committed to preventing the public from losing more of their hard-earned money to these scams,” said Assistant Attorney General Kenneth A. Polite Jr. “The department will not allow these defendants or others like them to keep the fruits of their crimes.”

Charges and Penalties

Potapenko and Turõgin face charges of:

  • Conspiracy to commit wire fraud
  • 16 counts of wire fraud
  • One count of conspiracy to commit money laundering

If convicted, they each face a maximum penalty of 20 years in prison.

Investigation and Cooperation

The FBI is investigating the case with assistance from:

  • The Cybercrime Bureau of the National Criminal Police of the Estonian Police and Border Guard
  • The U.S. Department of Justice’s Office of International Affairs

This investigation demonstrates the importance of international cooperation in disrupting cyber-enabled crime. Estonia has been a crucial ally in this effort, and the United States thanks them for their continued assistance.

Victims’ Information

Individuals who believe they may have been victims of this scam are encouraged to visit www.fbi.gov/HashFlare for more information. An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.