In October, the US Department of Justice DOJ charged Ukrainian national Mark Sokolovsky with identity theft and conspiracy to violate the Computer Fraud and Abuse Act, money laundering, wire fraud and aggravated identity theft. A month later, the DOJ has arrested another eastern European for money laundering and criptocurrency fraud.
Two Estonian citizens were arrested yesterday in Tallinn, Estonia, on an 18-count indictment for their involvement in a $575 million criptocurrency fraud and money laundering conspiracy.
According to the report, Sergei Potapenko and Ivan Turgin, both 37, allegedly defrauded hundreds of thousands of victims through a multi-faceted scheme, which led them to enter fraudulent equipment rental contracts with the defendants' mining service HashFlare, the department said.
The victims invested in a virtual currency bank called Polybius Bank, which in reality was not a bank and never paid out the promised dividends, DOJ added.
Victims paid more than $575 million to Potapenko and Turgin's companies and they both used shell companies to launder the fraud proceeds and purchase luxury cars, the department said.
Assistant Attorney General Kenneth A. Smith said that new technology has made it easier for bad actors to take advantage of innocent victims in the U.S. and abroad in increasingly complex scams. Polite, Jr., of the Justice Department's Criminal Division. The department will not allow these defendants or others like them to keep the fruits of their crimes, because they are committed to keeping the public from losing more of their hard-earned money in these scams. The size and scope of the scheme is truly astounding. The defendants capitalized on both the allure ofcryptocurrencies and the mystery surroundingcryptocurrencies mining to commit an enormous Ponzi scheme, said Nick Brown, U.S. attorney for the Western District of Washington. They lured investors with false representations and then paid early investors with money from those who had 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. The U.S. and Estonian authorities are working to seize and restrain these assets and take profit out of these crimes. Assistant Director Luis Quesada, of the FBI's Criminal Investigative Division, said that the FBI is committed to pursuing subjects across international borders who are using increasingly complex schemes to defraud investors. Victims in the U.S. and abroad invested into what they believed were sophisticated virtual asset ventures but it was all part of a fraudulent scheme and thousands of victims were harmed as a result. The FBI thanks our national and international partners for their efforts to bring justice to the victims. The indictment was returned by a grand jury in the Western District of Washington on October 27 and was unveiled yesterday.