These Two Fraudsters Duped Crypto Investors Out of $575,000,000 – This is What Happened
Two Estonian nationals have been arrested for alleged involvement in crypto-related fraud and money laundering activities worth some $575m.
The two were arrested in Tallinn, Estonia on Sunday on an 18-count indictment that involved a crypto mining service called HashFlare, and a fictitious “virtual currency bank” called Polybius Bank, a press release from the US Justice Department said.
The two suspects were identified as Estonian citizens Sergei Potapenko and Ivan Turõgin, both 37 years old.
According to the Justice Department, the two suspects induced victims to enter into “fraudulent contracts” for crypto mining equipment and invest money in HashFlare, which was promoted as a hosted crypto mining service.
Additionally, the perpetrators got victims to invest in Polybius Bank. Unfortunately for the victims, Polybius “was never actually a bank, and never paid out the promised dividends,” the Justice Department said.
Polybius has in the past issued an ERC-20 token known as PLBT. The token price is down by approximately 95% since its launch in 2017, and has a current market capitalization of just $1.6m, according to CoinMarketCap data.
The centralized exchange HitBTC listed PLBT in January of 2020.
In total, the victims paid more than $575m to Potapenko and Turõgin’s companies, and the money was then laundered through shell companies and finally spent on various luxury items.
“The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme,” commented Nick Brown, U.S. Attorney for the Western District of Washington.
He went on to explain that the illegal operation resembled a classic
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