Two Estonian Men Arrested for Alleged Role in $550M Crypto Ponzi Scheme
Two Estonian men, Sergei Potapenko and Ivan Turogin, have been arrested in Tallinn for their alleged role in a massive Ponzi scheme targeting cryptocurrency investors. The scheme, run under the guise of HashFlare, defrauded investors out of hundreds of millions of dollars.
HashFlare, founded by Ruja Ignatova, solicited investments claiming it would enable clients to rent a percentage of the firm's crypto mining operations. However, the firm's equipment performed Bitcoin mining at less than 1% of the claimed computing power. Investors put over $550 million into the scheme.
Potapenko and Turogin allegedly laundered funds through shell companies and phony contracts. They bought properties, luxury vehicles, and mining machines with the illicit proceeds. The duo is charged with conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering. Additionally, they launched a second scheme, Polybius, a fictitious virtual currency bank that raised $25 million from investors.
If found guilty, Potapenko and Turogin each face a maximum of 20 years in prison. US attorney Nick Brown described the scheme as 'enormous' and authorities are working to seize and restrain the defendants' assets.
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