Estonian authorities have arrested two suspects, accused of setting up a $575 million scam involving a cryptobank and fake cloud mining. These pseudo projects named respectively Plobybius and HashFlare were in fact Ponzi schemes.
Two suspects arrested in $575 million scam
The US Department of Justice revealed earlier this week that Estonian authorities had arrested Sergei Potapenko and Ivan Turõgin. The two people are the main suspects in a fake cloud mining scam case named HashFlare.
In addition to this, they are also accused of setting up a fake cryptobank project by the name of Polybius Bank. For these two frauds, the amount of damage would be 575 million dollarsstolen from investors around the world in a Ponzi scheme.
As part of international cooperation with Estonia, the FBI was able to conduct the investigation alongside other judicial institutions. In addition, the Grand Jury for the Western District of Washington pronounced 18 counts against the defendantsconcerning all the acts of which they are accused.
Nick Brown, the US attorney in charge of the case, pointed out major fraud :
“The size and scope of the alleged scheme is truly staggering. These defendants capitalized on both the lure of cryptocurrency and the mystery surrounding their mining to commit a massive Ponzi scheme. »
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A scam based on cloud mining and cryptobanking
As previously mentioned, Sergei Potapenko and Ivan Turõgin’s scam was based on two parts: cloud mining with Hashflare and a crypto bank with Polybius.
In reality, neither of the two projects had any real foundations and they rested neither more nor less than on wind.
When it comes to cloud mining, this concept consists of providing funds to a cryptocurrency mining company. These funds will make it possible to finance equipment and the contract for a period determined in advance. makes it possible to recover its investment with a capital gain realized by the product of the extraction.
However, the American justice argues that HashFlare, which operated between 2015 and 2019, had mining power less than 1% of what they claimed to have. Worse still, the few customers who could have withdrawn their money would actually have been paid with cryptocurrencies bought at the market and not through hypothetical mining rewards.
For its part, Polybius, born in 2017 and which also claimed to offer returns on cryptocurrencies, never materialized, nor paid any returns. Furthermore, the two defendants allegedly laundered stolen money by reinjecting it in particular into real estate and luxury cars through front companies.
This story reminds us that in an environment that seems as complex in appearance as cryptocurrencies, several malicious actors will play with it, in order to touting revolutionary promises in order to make money on the backs of investors.
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Source: US Department of Justice
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