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Cryptocurrency: Two Estonian Men Arrested Over $575M Scheme

    Cryptocurrency: Two Estonian Men Arrested Over $575M Scheme
    Last updated: 1 week ago
    Image credit: Fox Business [via Reuters]

    Facts

    • The FBI and Estonian police on Sunday arrested two Estonian men who have been charged with one count of conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering. They face a maximum of 20 years in prison if convicted. [1]
    • The men are accused of defrauding hundreds of thousands of people through multiple crypto-related schemes — including coercing victims into fraudulent rent contracts and investing a total of $575M in a fake cryptocurrency bank called Polybius Bank and then never paying dividends. [2]
    • Between 2015 and 2019 the men, Sergei Potapenko and Ivan Turõgin, also allegedly tricked people into buying contracts for a cryptocurrency mining service called HashFlare, after which the duo used shell companies to launder the fraud proceeds to purchase real estate and luxury cars. [3]
    • Some of the victims were from the US state of Washington, with Seattle US Attorney Nick Brown saying: "These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme. They lured investors with false representations and then paid early investors off with money from those who invested later." [3]
    • As the FBI investigates the case, US Assistant Attorney General Kenneth Polite Jr. of the US Dept. of Justice's criminal division said, "U.S. and Estonian authorities are working to seize and restrain these assets and take the profit out of these crimes." [4]
    • Four other suspects were also charged in Estonia, Belarus, and Switzerland, but their identities have not been released. [5]
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    Spin

    Pro-establishment narrative

    As the entire world becomes aware of what was once a niche hobby for enthusiasts, governments and the general public have begun to understand that unregulated cryptocurrency is a growing threat to unsuspecting investors. Blatant Ponzi schemes like this are tragic for those who fall for them, but so are the so-called "stable" coins like Bitcoin that can lose over half of their value seemingly overnight. Regulators need to be on top of this volatile industry before more victims lose their savings.

    Establishment-critical narrative

    Despite what you may hear in the news and from politicians, the government is not broadening its investigatory and regulatory reach to help the people fight crypto schemes. On the contrary, the establishment wants to use Ponzi scheme stories to cudgel citizens into giving them the power to control how they invest and what they purchase.

    Nerd narrative

    There's a 50% chance that at least 5 countries will recognize Bitcoin as legal tender by Jan 1, 2030, according to the Metaculus prediction community.

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