DOJ Charges 2 in $575M Crypto Mining Scam

Cryptocurrency fraud regulation continues to be a priority in the U.S. as two Estonian citizens were arrested Sunday (Nov. 20) for their alleged involvement in a money laundering and crypto fraud case.

In a Monday (Nov. 21) press release from the U.S. Department of Justice, Sergei Potapenko and Ivan Turõgin were taken into custody in Estonia and accused of defrauding “hundreds of thousands of victims through a multifaceted scheme” totaling $575 million.

U.S. Attorney for the Western District of Washington Nick Brown said in the release that this was an “astounding” case of international crypto fraud.

According to the Oct. 27 indictment that was unsealed Monday, Potapenko and Turõgin claimed that their crypto mining business, HashFlare, offered contracts that would supposedly allow customers to rent a percentage of the company’s mining operations in exchange for the mined bitcoin between 2015 and 2019, all of which turned out to be fraudulent.

“They lured investors with false representations and then paid early investors off with money from those who invested later. They tried to hide their ill-gotten gain in Estonian properties, luxury cars, and bank accounts and virtual currency wallets around the world. U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes,” Brown said in the Nov. 21 press release.

With the crypto trading market seemingly falling apart, cases of people taking advantage of crypto newcomers and using those funds for money laundering and fraudulent crypto transactions are on the rise.

On Friday (Nov. 18), a similar case occurred in the U.S., with federal authorities charging an Ohio man for his involvement in a fraudulent cryptocurrency investment scheme that raised at least $10 million from investors.

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Author: Traciwininger

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