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Two Arrested in Estonia for Cheating Hundreds of Thousands in $575 Million Crypto Fraud Scheme




By Agence France-Presse | Updated: 22 November 2022

Two men have been arrested in Estonia on suspicion of defrauding $575 million (roughly Rs. 4,700 crore) from hundreds of thousands of people in a cryptocurrency scheme, Estonian police said on Monday. Sergei Potapenko and Ivan Turogin were arrested on Sunday in a joint operation by Estonian police and the FBI and Washington have requested the extradition of the two men, the police said in a statement.

“This is one of the largest fraud cases we’ve ever had in Estonia,” Oskar Gross, head of the police’s cybercrime bureau, was quoted as saying.

The statement said the suspects “invited people to invest in their cryptocurrency token. However, they did not develop the token as promised”.

“Fraud proceeds were allegedly laundered through real estate purchases and shell companies,” it added.

The joint operation involved more than 100 police officers, including around 15 US federal agents.

Back in August, Reuters reported that Dutch authorities arrested a 29-year-old man believed to be a developer for crypto mixing service Tornado Cash. The platform was added to the US sanctions list, after allegations that it was helping conceal billions in capital flows, including for North Korean hackers.

Tornado Cash is one of the largest crypto blenders identified as problematic by the US Treasury, as the online service makes it possible to conceal the origin or destination of digital payments, increasing their anonymity, by mixing cryptocurrencies.

The digital currency mixing service has allegedly been used to launder more than $7 billion (roughly Rs. 57,000 crore) worth of virtual currency since its creation in 2019, the Treasury had stated at the time, while announcing an enforcement action against Tornado Cash. That includes the more than $455 million (roughly Rs. 3,700 crore) stolen by the Lazarus Group, a state-sponsored hacker collective with ties to North Korea.