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Estonia, US Arrest 2 Suspects In $575 Million Crypto Fraud Scheme

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Estonia, US Arrest 2 Suspects In $575 Million Crypto Fraud Scheme

Law enforcement officers from Estonia and the United States have arrested two men for allegedly committing a large-scale cryptocurrency fraud. The Estonian nationals, who ran a crypto mining service and a fake virtual currency bank, laundered their proceeds, spent on cars and real estate, and donated to a politician.

Estonian Police, FBI Detain 2 Crypto Fraudsters in Joint Operation

Two Estonian citizens, suspected of fraud involving cryptocurrency and money laundering, have been arrested by the Estonian National Criminal Police and the U.S. Federal Bureau of Investigation (FBI). The United States is now seeking their extradition.

Sergei Potapenko and Ivan Turõgin, both 37, have been accused of defrauding hundreds of thousands of people, the Estonian state broadcaster Eesti Rahvusringhääling (ERR) reported. They were detained as a result of a joint investigation on Sunday, Nov. 20.

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Some of the victims were persuaded to enter into fraudulent equipment rental contracts with their mining service called Hashflare. Others invested in Polybius Bank, a virtual currency bank which was never a bank and did not pay out the promised dividends.

According to an announcement by the U.S. Department of Justice, investors paid over $575 million to the platforms set up by the pair, who then laundered their proceeds through shell companies and used some of the money to buy properties in Estonia and luxury cars.

Potapenko and Turõgin tried to hide the rest of the money in bank accounts and cryptocurrency wallets around the world. U.S. and Estonian authorities are working to seize and restrain these assets, said U.S. Attorney Nick Brown for the Western District of Washington, who also emphasized:

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.

Crypto Scheme Described as One of the Largest Frauds in Estonia

The Estonian police and the FBI collaborated closely, with 100 police officers, including over a dozen federal agents from the United States, involved in the investigation, which the head of the Cybercrime Bureau of Estonia’s National Criminal Police Oskar Gross called “long and vast.” Quoted by ERR, he stated:

The sheer volume of this investigation is described by the fact that this is one of the largest fraud cases we’ve ever had in Estonia.

“Technology has broadened the risk of fraud and before trusting one’s money to a venture or a person, an in-depth gathering of background information should be conducted,” commented State Prosecutor Vahur Verte, who warned people to look after their money.

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On Tuesday, the local media also revealed that Potapenko and Turõgin were among the biggest donors of Estonian politician and lawmaker Raimond Kaljulaid during his campaign for a seat in the European Parliament in 2019. Kaljulaid, who received €12,500 from them, claims he learned of their involvement only this week.

“There are many legitimate ways to turn cryptocurrencies into business, but choosing a shortcut through deception or opaqueness is not a way to go about the venture,” Oskar Gross insisted. The case is not the first crypto-related crime in Estonia, ERR noted in its report. In October, the Estonian police arrested suspects linked to the Dagcoin crypto investment fraud.

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arrests, Bank, criminal police, Crypto, Crypto Fraud, Cryptocurrencies, Cryptocurrency, department of justice, DOJ, Estonia, estonian, extradition, FBI, Fraud, Investigation, Ivan Turõgin, Law Enforcement, mining, Police, Sergei Potapenko, U.S., United States, US

Do you expect more arrests in the case of the crypto fraud scheme in Estonia? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Israel Arrests 3 In Crypto Scheme To Launder Millions Stolen From France

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Israel Arrests 3 In Crypto Scheme To Launder Millions Stolen From France

Police in Israel have detained three suspects who allegedly laundered millions of euros stolen from the French treasury through cryptocurrency transactions. The money came from government grants for businesses affected by the Covid-19 pandemic.

Israeli Law Enforcement Busts Money-Laundering Ring Using Coins to Clean Money for French Fraudsters

Three people have been arrested in Israel this week on suspicion of providing money-laundering services to criminals who defrauded the French state. The operation follows a covert investigation carried out by Lahav 433, Israel’s special crime-fighting unit, the English-language online newspaper Times of Israel and major local media reported.

According to the publications, the authorities believe the detained persons have used various cryptocurrencies to launder millions of euros, which were then returned to the French clients, for which the Israelis were remunerated. Several other suspects have also been questioned as part of the efforts to unravel the scheme.

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Besides Lahav 433, the Yahalom investigative unit of the Israel Tax Authority and the cybercrime and international crime departments of the State Attorney’s Office also took part in these efforts. The Israel Police were collaborating closely with their French counterparts and the European Union Agency for Law Enforcement Cooperation (Europol) as well, the reports detail.

While the Israelis started working on the case earlier in 2022, the French launched their investigation last year. The fraudsters in France exploited the government program to support entities impacted by the negative effects of the Covid-19 pandemic in 2020 and 2021, when the European economy was hit by lockdowns.

The French organizers of the theft established fictitious companies and managed to apply and receive compensation payments granted by the government. Paris wanted to quickly distribute the funds to provide immediate assistance to businesses that were suffering financially and implemented insufficient oversight.

They then employed the money-laundering services of the arrested Israelis who bought cryptocurrency with the money and exchanged it through multiple coins to obscure the original source of the funds before eventually buying fiat currency again. Police officials declined to comprehensively explain how the system worked, but promised to provide more details soon.

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arrests, Criminals, Crypto, Cryptocurrencies, Cryptocurrency, Europol, France, french, grants, Investigation, investigators, israel, Israeli, Money Laundering, pandemic, Police, Suspects

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Do you think Israel will arrest more people as part of the investigation into the money-laundering scheme? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, meunierd

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Another 6 Members Of Finiko Crypto Pyramid Arrested In Russia

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Another 6 Members Of Finiko Crypto Pyramid Arrested In Russia

Russian law enforcement authorities have detained six more members and executives of the notorious crypto Ponzi scheme Finiko. Police in the Republic of Tatarstan and Russia proper have conducted dozens of searches as part of an ongoing investigation into the pyramid, which defrauded investors around the world.

New Arrests in Finiko Case Made in Russian Federation

The Russian Ministry of Internal Affairs, with the help of the National Guard of the Russian Federation, has taken into custody six participants and leaders of Finiko, Russia’s largest financial pyramid in recent decades. The members of the fraudulent scheme have been active between January 2018 and July 2021 in Tatarstan and other Russian regions, the ministry’s spokesperson Irina Volk told Tass.

Volk explained that they advertised the project to attract investors with promises of extraordinarily high profits in the range of 3 to 5% a day. The fraudsters asked them to convert their fiat money into bitcoin and send it to the crypto wallets controlled by Finiko. Their personal accounts were then credited with “Tsifron,” the platform’s own currency.

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In reality, Finiko was never registered as a legal entity in Russia and did not make any investments on behalf of its clients. After some time, it simply stopped paying investors the promised dividends and they were unable to withdraw their funds. The complaints of more than 5,000 people are now part of the materials for the criminal case.

Officially recognized losses exceed 5 billion rubles ($65 million) but the actual total may be much higher. According to a report by blockchain forensics firm Chainalysis, the scam had received over $1.5 billion worth of bitcoin in 800,000 separate deposits between December 2019 and August 2021. Citizens of Russia, Ukraine and other former-Soviet republics, several EU member states, and the U.S. are among the victims.

A number of Finiko’s top figures were arrested last year, including the pyramid’s founder and mastermind Kirill Doronin, two of its vice presidents, Ilgiz Shakirov and Dina Gabdullina, as well as Lilia Nurieva, who rose to the rank of a so-called “10th Star.” In November, Doronin offered to testify against 44 of his accomplices. His close associates Zygmunt Zygmuntovich, Marat Sabirov and Edward Sabirov, left Russia as the crypto scheme collapsed last summer, avoiding detention.

Irina Volk noted that property belonging to the accused worth more than 1.3 billion rubles has been confiscated. Representatives of the Russian interior ministry’s Investigative Department have carried out over 70 searches alongside the latest arrests, seizing documents and computer equipment as evidence for the case.

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arrests, Case, Crypto, crypto pyramid, Cryptocurrencies, Cryptocurrency, detention, Executives, financial pyramid, Finiko, Fraud, fraudsters, Investigation, investment scheme, members, Ponzi Scheme, Pyramid, russian, Suspects, tatarstan

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Do you expect Russian authorities to arrest more suspects as part of the investigation against Finiko? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Crypto Pyramid Busted In Russia, Losses Exceed $10 Million

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Crypto Pyramid Busted In Russia, Losses Exceed $10 Million

Russian law enforcement agencies have gone after the organizers of a large crypto pyramid which has been promising extraordinarily high returns. The Ponzi scheme is being unraveled after a similar project defrauded thousands of investors in Russia, the region, and far beyond.

Police Find Crypto Pyramid Organizers in Dagestan, Russia

Officers from the Federal Security Service (FSB) and the Ministry of Internal Affairs in the Russian republic of Dagestan have identified persons suspected of organizing a major financial pyramid offering victims profits of up to 500% per year on their investments in digital assets.

According to sources quoted by the Russian business daily Kommersant, the suspects are representatives of the Yusra Global project, Forklog reported. Besides Dagestan, the fraudulent entity had established offices in other Russian regions, Kazakhstan in Central Asia, and Turkey.

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The publication reveals that the authorities have detained four people in January, all Russian citizens, who are believed to be behind the Ponzi scheme. They were initially placed under arrest for a period of two months. The defendants may face up to ten years in prison on top of hefty fines.

The perpetrators of the fraud were inflating quotes of values of digital assets and paid out dividends using the funds invested by new participants in the pyramid, the report detailed. They distributed the rest of the money amongst themselves and purchased real estate.

Preliminary estimates suggest the victims’ losses amount to 1 billion rubles, or more than $10 million according to current exchange rates at the time of writing, the Russian newspaper revealed.

The news about the investigation into Yusra Global comes after last year, when Russian authorities busted arguably the country’s largest financial scam since the notorious MMM pyramid in the 1990s.

Finiko, also a Ponzi scheme exploiting the rising popularity of cryptocurrencies, is responsible for the loss of up to $4 billion in total. Its founder Kirill Doronin — a social media influencer linked to other scams in the past — and a number of his accomplices were arrested.

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Citizens of Russia, Ukraine, and other countries in the former-Soviet space, EU member states, and the U.S. are among the people who sent 800,000 separate crypto deposits to the phantom entity. The pyramid, which was based in another Russian republic, Tatarstan, received over $1.5 billion worth of bitcoin in less than two years, according to Chainalysis.

Tags in this story

arrests, Crypto, crypto pyramid, Cryptocurrencies, Cryptocurrency, Dagestan, detainees, financial pyramid, Finiko, Fraud, organizers, Ponzi Scheme, Pyramid, Russia, russian, tatarstan, Yusra Global

Do you expect Russian authorities to target other financial pyramids related to crypto investments? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

Advertisement

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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