The men are suspected of defrauding investors with a pyramid scheme. Victims have been promised income from cryptocurrency mining, but in reality there has been no activity.
TALLINN The 37-year-old men were arrested on Sunday in a joint operation between the FBI and the Central Criminal Police of Estonia. The men are suspected of gross fraud and money laundering between 2015 and 2019.
According to the Central Criminal Police of Estonia, the duo has seemingly attracted investments cryptocurrency mining (you switch to another service) to Hash Flare cryptomining. In addition, the men have founded the Polybius bank for cryptocurrency, which however has never had banking operations.
The men are suspected of luring investors with a so-called Ponzi scheme, which is a form of pyramid scheme.
– When a dividend has been paid to investors, it has come from their own investments. In reality, there have been no returns, the head of the cybercrime department of the Central Criminal Police of Estonia Oskar Gross says the Estonian public radio company ERR in an interview (you move to another service).
The suspicion of money laundering is related to the fact that the duo invested the funds they defrauded in properties purchased from Estonia, private cars, cryptocurrency wallets and thousands of cryptocurrency mining devices.
A $575 million blowout
US Department of Justice doubts (you switch to another service), that the number of victims of the Estonian duo reaches hundreds of thousands. A large part of them are from the United States.
A total of approximately 575 million dollars has been taken from those who were defrauded. Hash Flare was run down in 2019.
According to Oskar Gross, it is the biggest fraud in the history of Estonia, which has been investigated for several years in cooperation with the FBI and the Central Criminal Police of Estonia.
Prosecutor General of Estonia Vahur Verten by (you switch to another service) the victims of the scam are trying to return the money they lost.
The US authorities intend to demand the detention of the suspects for the duration of the preliminary investigation and their extradition to the United States.
Data center and football sponsorship
The two suspected of crimes, born in 1985, are from Northeast Estonia. They are well-known entrepreneurs in their home region.
The men’s current company has, among other things, built a data center costing 10 million euros in the area of the Narva power plant, write (you switch to another service) Põhjarannik local newspaper.
The men have also sponsored a local football team.