In Estonia, two 37-year-old Estonians have been arrested for their involvement in a massive cryptocurrency scam. The US Department of Justice stated that the two men, Sergei Potapenko and Ivan Turgin, caused $575 million in damages. According to the Americans, hundreds of thousands of people were deceived.
From 2015 to 2019, Estonians had two victims sign contracts with a suspect service called HashFlare. Victims rent power to that company’s equipment, from which digital currencies (mined) will be created. Actually, this did not happen. The two claimed that HashFlare will mine a lot of cryptocurrencies, such as bitcoin.
But US Justice says they didn’t have any equipment for that. In fact, only one percent of the promised amount of cryptocurrency can be generated.
Letter box companies
Victims from the United States, among others, were also urged to invest in a crypto bank called Polybius. But this company did not exist at all and did not pay the promised dividends. Users requesting a refund received nothing or were paid in cryptocurrency that scammers purchased and were not mined. Hashflare closed its doors in 2019.
Potapenko and Turõgin channeled the money they earned through letterbox companies and invested it in real estate, expensive cars, and cryptocurrency for their own use, among other things.
US authorities described the scale of the case as “really staggering”. If convicted, the two Estonians face twenty years in prison. They have been tried in the United States.