Ivan Turogin and Sergei Potapenko are suspected in a $575 million fraud case, but they can’t be exposed to U.S. detention conditions.
Ivan Turogin and Sergei Potapenko, co-founders of Bitcoin cloud miner HashFlare, have successfully appealed their extradition from Estonia to the United States, where the two face 18 counts of fraud and money laundering. The Tallinn Circuit Court overturned a lower court’s order on Nov. 29, according to a local press report.
According to the United States Justice Department, HashFlare, which operated from 2015 to 2019, was a Ponzi scheme with hundreds of thousands of victims paying in a total of $575 million. The company claimed to lease hashing power for crypto mining. It also encouraged investment in a fake bank. If convicted in the United States, Turogin and Potapenko each face up to 20 years in prison.
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Turogin and Potapenko were arrested in Estonia, where they are citizens, after a U.S. grand jury returned an indictment in November 2022. The Estonian government approved their extradition in September. According to the BBC, the investigation of the men was carried out in Estonia with the help of 15 Americans and was one of the biggest fraud cases in the country’s history.
The FBI’s Seattle Division is seeking information from potential victims of two fraudulent schemes launched by Ivan Turõgin and Sergei Potapenko through their companies HashCoins, https://t.co/nkvQ93QCgz, and Polybius.
— Hacker News (@Hacker__News) January 6, 2023
The businessmen’s defense provided “evidence regarding the conditions of detention in the United States” that the government had not considered and claimed there were procedural irregularities in issuing the extradition orders. In overturning those orders, the circuit court cited European Court of Justice and the European Court of Human Rights practice.
The court ordered Turogin, Potapenko and their families to receive over 100,000 euros ($110,000) in reimbursement. Its decision can be appealed by Dec. 11.
Estonia passed enhanced Anti-Money Laundering laws, including the introduction of the Financial Action Task Force Travel Rule, that led to the closure of almost 400 virtual asset service providers in May.
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