Two Estonian nationals have been arrested for their alleged involvement in crypto-related fraud and money laundering activities amounting to approximately $575m.
The two were arrested on Sunday in Tallinn, Estonia, on an 18-count indictment involving a crypto mining service called Hashflare and a bogus “virtual currency bank” called Polybius Bank. Press release told the US Department of Justice.
The two suspects were identified as Estonian nationals Sergei Potapenko and Ivan Turogin, both aged 37.
According to the Department of Justice, the two suspects induced victims to enter into “fraudulent contracts” for cryptocurrency mining equipment and invest in Hashflare, which was promoted as a hosted cryptocurrency mining service.
Additionally, the criminals forced the victims to invest in Polybius Bank. Unfortunately for the victims, Polybius “was not actually a bank, and never paid the promised dividends,” the Justice Department said.
Polybius has issued an ERC-20 token known as PLBT in the past. According to CoinMarketCap data, the token has lost nearly 95% in price since its launch in 2017, and has a current market capitalization of just $1.6m.
centralized exchange HitBTC lists PLBT In January of 2020.
$575 million spent on luxury goods
In total, the victims paid over $575m to Potapenko and Turgin’s companies, and the money was then laundered through shell companies and finally spent on various luxury items.
“The size and scope of the alleged scheme is truly astonishing. These defendants took advantage of both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining to perpetrate a massive Ponzi scheme,” said Nick Brown, US Attorney for the Western District of Washington commented.
He explained that the illegal operation resembled a classic Ponzi, where early investors were paid money from those who joined later.
“They tried to hide their illegal profits in Estonian properties, luxury cars and bank accounts and virtual currency wallets around the world. US and Estonian authorities are working to seize and control these assets and profit from these crimes,” Brown said. working for.
Individuals who believe they may be victims in the case are asked to visit the FBI website at fbi.gov/hashflare for more information.
The FBI is probing the matter.
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