According to a press release from the U.S. Department of Justice (DOJ), Estonian citizens Sergei Potapenko and Ivan Turõgin made their first court appearance yesterday in connection with their alleged cryptocurrency fraud case. The Western District of Washington previously charged them with operating the fraudulent cryptocurrency mining service platform HashFlare from 2015 to 2019, defrauding hundreds of thousands of victims into investing more than $550 million in promised mining shares that never materialized. Potapenko and Turõgin raised at least $25 million in May 2017 by investing in the company Polybius, claiming to set up a virtual currency bank. Although Polybius promised dividends from its profits, the bank was never established and most of the funds were allegedly transferred to accounts controlled by the defendants.
The DOJ further alleges that the two laundered funds through shell companies, fake contracts and invoices to purchase 75 properties, six luxury cars, cryptocurrency wallets and thousands of mining machines. They face charges of conspiracy to commit wire fraud, 16 counts of wire fraud, and conspiracy to commit money laundering, each of which carries a maximum penalty of 20 years in prison. (Decrypt)