Two Arrested in Estonia Over $575 Million Crypto Fraud Scheme

Two men have been arrested in Estonia for allegedly defrauding $575 million (roughly Rs. 4,700 crore) from hundreds of thousands of people through a cryptocurrency scheme, Estonian police said on Monday. Sergei Potapenko and Ivan Turogin were arrested on Sunday while the Estonian police and the FBI and Washington requested that the two men be extradited, the police said in a statement.

“This is one of the biggest fraud cases we have ever had in Estonia,” Oskar Gross, head of the police’s cyber crime unit, 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”.

“The fraud money is said to have been obtained illegally through the purchase of real estate and shell companies,” it added.

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

Back in August, Reuters reported that Dutch authorities had arrested a 29-year-old man believed to be the developer of crypto exchange service Tornado Cash. The platform was added to the US sanctions list after allegations that it helps hide billions in revenue, including from North Korean hackers.

Tornado Cash is one of the biggest crypto mixers identified as problematic by the US Treasury Department, as the online service makes it possible to hide the origin or destination of digital payments, increasing their anonymity, by mixing crypto money.

The digital money mixing service has allegedly been used to withdraw more than $7 billion (roughly Rs. 57,000 crore) since its inception in 2019, the Finance Ministry said at the time, while announcing the Tornado Cash enforcement action. That includes more than $455 million (roughly Rs. 3,700 crore) stolen by the Lazarus Group, a state-sponsored hacker group with ties to North Korea.

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