Criminal Police and the FBI arrested suspects related to a $575 million cryptocurrency fraud and money laundering

In the course of joint operation, on the 20th of November the Cybercrime Bureau of the National Criminal Police and the FBI arrested individuals, Sergei Potapenko and Ivan Turõgin, who are suspected of fraud and money laundering. It is suspected by the law enforcement agencies that the individuals have caused more than half a billion dollars in damages.

Suspects are alleged to have misused their clients' investments, and of operating a Ponzi scheme. According to evidence gathered so far in the investigation, they invited people to invest in their cryptocurrency token, however, they did not develop the token as promised. The venture had hundreds of thousands of clients all over the world and the damages reach more than 500 million dollars. Fraud proceeds were allegedly laundered through real estate purchases and shell companies.

Oskar Gross, Head of the Cybercrime Bureau of the National Criminal Police stated that it has been a long and vast investigation. "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. At this point, we have reached the phase in the investigation, where enough evidence has been collected in order to detain the suspects. This investigation is founded on close cooperation between the FBI and Estonian police and we have been able to coordinate our action from the very beginning of the investigation."

This is just another example that Estonian police and partners have their eyes on cryptocurrency-related businesses – just in October, the National Criminal Police arrested suspects related to Dagcoin cryptocurrency investment fraud. "Of course, cryptocurrency-related investigations are complex and usually take a lot of resources, but this does not mean that law enforcement does not give their best to investigate these cases. 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," added Gross.

State Prosecutor Vahur Verte says that law enforcement agencies aim to disturb criminal activity and restore a sense of security in victims. “Criminal activity should not be profitable and law enforcement is working to restore funds to the victims. Technology has broadened a 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. Estonia is a valued partner in international cooperation and we work together with agencies of different countries. Regardless, it is better to safeguard one’s assets, rather than try and retrieve it through criminal and court proceedings,” said Verte.

The searches and arrests are conducted in the scope of a criminal investigation in the US. The joint operation involved more than 100 police officers, including around 15 federal agents from the US.

The US agencies seek the arrest and extradition of the suspects to the USA.

Estonian Police and Border Guard Board and the Office of the Prosecutor General may not release any additional information related to this criminal case. We kindly ask you to forward your question to the Communications Director for the U.S. Attorney’s Office: ....

USA press release:

Britta Sepp
Communications specialist
Police and Border Guard Board
+372 5411 0169

Kairi Küngas
PR Advisor
Office of the Prosecutor General
+372 5556 4511