A massive cryptocurrency pyramid scheme worth more than $575 million has been busted. In the new crypto Çiftlik Bank case, two Estonian citizens were caught in their country the other day.
Two Estonian citizens were arrested in the Estonian capital, Tallinn, on Sunday, on charges of a $575 million cryptocurrency scam and money laundering in the US. The 37-year-old defendants, Sergei Potapenko and Ivan Turõgin, are charged with defrauding hundreds of thousands of people between December 2013 and August 2019, along with other accomplices residing in Estonia, Belarus and Switzerland.
The victims’ assets were allegedly transferred to them through an intricate network of shell companies, bank accounts, virtual asset services and cryptocurrency wallets designed to aid money laundering.
With a cryptocurrency mining service called HashFlare, investors have been tricked into cloud-based remote mining because there is neither a cloud system nor the equipment needed for mining. In addition, the defendants encouraged investors to invest in a cryptocurrency bank called Polybius Bank and used this front company to run operations.
Potapenko and Turõgin collected more than $575 million in total from victims. This collected money was also laundered with real estate and luxury cars purchased thanks to the front companies established. No dividends were paid to investors during this period. As in similar fraudulent activities, the money of those who made the first investment was paid with the money of those who joined the system later, and the system was expanded. Those who continued to invest were completely victimized.
“The scale and scope of the alleged scheme is truly astounding. These defendants took advantage of both the lure of cryptocurrency and the mystery surrounding cryptocurrency mining to carry out a massive pyramid scheme,” said US Attorney General Nick Brown.
The two are charged with 16 counts of electronic fraud, one money laundering conspiracy and conspiracy to commit electronic fraud. If found guilty, Potapenko and Turõgin each face a maximum prison sentence of 20 years.