Two individuals have been arrested in Estonia on suspicion of operating a $575m (£485m) cryptocurrency fraud with hundreds of thousands of victims.
US officials want to extradite Sergei Potapenko and Ivan Turogin, both of whom are Estonians and who was investigated by Estonian and FBI agents.
The two 37-year-olds allegedly convinced individuals to invest in HashFlare, a bitcoin mining business, and Polybius, a fraudulent virtual bank.
An indictment has been issued by the US.
The pair is accused of wire fraud and conspiracy to commit money laundering, offenses punishable by up to 20 years in prison, according to a statement from the United States Department of Justice (DoJ).
The suspects have appeared in court in the Estonian city of Tallinn and are awaiting extradition to the United States, according to the statement.
No immediate comment was made by their reps.
The Department of Justice explains the alleged scam, alleging that the defendants misled victims by promising them the opportunity to invest in HashFlare’s bitcoin mining operations.
Cryptocurrency mining employs computers to manufacture virtual money for profit, a process that requires a substantial amount of computational power.
Between 2015 and 2019, HashFlare contracts were reportedly purchased for more than $500 million by customers around the globe. However, the operation may have exaggerated its capabilities.
The Department of Justice contends that victims were also promised rewards if they invested in Polybius, the virtual bank Mr. Potapenko and Mr.
This is reportedly how the defendants raised $25 million, but no bank was ever established.
DoJ reports that they used shell corporations to launder illegal proceeds, purchasing at least 75 residences and expensive vehicles.
Oskar Gross of Estonia’s police cybercrime division described the collaborative investigation, in which 100 officers participated, including 15 from the American side, as “extensive.”
It was “one of the largest incidents of fraud we’ve ever seen in Estonia,” he claimed, as quoted by Estonia’s ERR news agency on Monday.
The government also cautioned that technology had “increased the possibility of fraud.”
Following the collapse of the world’s second-largest cryptocurrency exchange, FTX, the cryptocurrency market is currently experiencing heightened anxiety.
According to court documents, the company filed for bankruptcy in the United States last week and owes its 50 largest creditors over $3.1 billion (£2.6 billion).
