• Wed. Jul 24th, 2024

Estonia will Extradite Crypto Fraud Suspects to the US

Walter Swift

ByWalter Swift

Jan 28, 2024
Estonia will Extradite Crypto Fraud Suspects to the US

Weeks after a District Court ruling blocking the extradition of two Estonian citizens to the United States, the Estonian government has overturned it, approving the extradition of the suspected cryptocurrency fraudsters to face criminal charges in America.

According to a January 25 article from the Estonian news outlet Postimees, the Estonian Ministry of Justice decided to proceed after determining that there was sufficient evidence that ensured that the government had not infringed on the fundamental rights of the individuals in question and that their extradition conditions have been satisfied.

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Barring any last-minute changes, Ivan Turogin and Sergei Potapenko, crypto business personalities behind HashFlare, will be extradited to the United States to face charges of 16 counts of wire fraud and one of conspiracy to commit money fraud. If convicted, Ivan and Sergei face up to 20 years behind bars each for their involvement in the (alleged) crypto scam.

What did Turogin and Potapenko do?

The two Estonian nationals are under investigation for their alleged involvement in three cryptocurrency mining scams: HashFlare.io, HashCoins, and Polybius. While their first project, HashCoin, sold Bitcoin mining equipment to users, HashFlare charged users to rent Bitcoin mining rigs owned and maintained by the company. Paying users could access a dashboard that showed how much crypto their mining rigs were purportedly generating.

However, the Federal Bureau of Investigation (FBI) revealed that HashFlare’s cloud mining service had far less mining power than it sold to users. To cover up the discrepancy, Ivan Turogin and Sergei Potapenko would purchase Bitcoin from third parties and distribute it to victims demanding a withdrawal.

The suspects also touted the idea of a digital bank project they named Polybius and even held an ICO to raise money for the proliferation of the ‘fully digital bank’ that works on blockchain technology. According to the Department of Justice, however, Polybius was never a bank in the first place.

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Ivan Turogin and Sergei Potapenko’s elaborate scheme started to fall apart in July 2018 when the duo terminated the cloud mining service and diverted over $575 million of investor funds. They would later launder the money through shell companies and buy luxury cars and real estate properties with the proceeds.

The Tallinn Circuit Court Blocked Previous Extradition Requests

After an indictment by a grand jury in the Western District of Washington back in October 2022, a joint military operation between the Federal Bureau of Investigation (FBI) and local Estonian law enforcement agents brought Ivan and Sergei to book in Estonia, commencing the battle to extradite them to the United States.

Their attorneys contested the Estonian Court’s September 7, 2023 ruling authorizing their extradition to the United States. After receiving a ruling from the Tallinn Circuit Court on November 29, 2023, Ivan and Sergei’s attorneys were able to stop the extradition.

Defending its judgment, the Circuit Court cited the government’s failure to investigate the potential detention conditions of the two Estonian citizens in the United States as a (major) factor influencing its decision. In addition to blocking the planned extradition, the Tallinn Circuit Court ordered the Estonian government to pay €46,365.30 and €50,710 to Ivan and Sergei, respectively.

Estonian Justice Ministry-The Extradition of Citizens was Justified

In a press release addressing the court judgment, the Estonian Ministry of Justice announced its decision to overturn the previous court ruling blocking the extradition after concluding the exercise is by the rule of law.

“The government concluded that the extradition of the citizens to the U.S. is justified, in accordance with the rule of law, and does not disproportionately affect the rights of the citizens,” the statement read partly, going further to defend its decision to overturn the existing court ruling. According to the press statement, a representative from Estonia reportedly inspected the proposed detention facility for the two Estonian nationals in the United States and can verify that the conditions are “human and lawful.”

Additionally, the press statement also cited the possibility of Estonia making extradition requests to other countries within and outside the European Union. Also, the Estonian government indicated no timeline for the proposed extradition. The event should happen in the coming months, barring legal or procedural issues. 

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Walter Swift

Walter Swift

Walter Swift is an adept crypto writer, known for his deep insights into the decentralized world. His pieces artfully break down complex blockchain topics, making them accessible to a broad audience. With a passion for emerging technologies, Walter's articles are a beacon for crypto enthusiasts and novices alike.

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