Accused Estonian Crypto Fraudsters Might Not Get Extradited to the US

A circuit court in Estonia overturned a previous ruling allowing the extradition of two Estonian citizens charged with cryptocurrency fraud and money laundering to the United States.

According to the court, the Estonian government did not consider certain circumstances before agreeing to extradite the individuals involved in the case.

New Court Ruling Cancels Extradition Approval

Ivan Turogin and Sergei Potapenko, who ran a virtual currency mining business called HashFlare, saw their appeals to prevent extradition to the United States approved. The Tallinn Circuit Court annulled the extradition because the government did not make investigations nor verify the condition of the US detention facility.

Turogin and Potapenko were arrested in Estonia in November 2022 for allegedly running a fraudulent crypto service that resulted in the loss of $575 million for users.

According to the Department of Justice (DOJ), both individuals allegedly made victims purchase equipment mining contracts for HashFlare and also urged them to invest in a crypto bank called Polybius, which promised to pay dividends to investors.

However, investigations revealed that the mining contracts were fake, while Polybius was not a bank and did not pay any dividends. Instead, the DOJ stated that Turoguin and Potapenko ran a Ponzi scheme defrauding “hundreds of thousands of victims” between 2015 and 2019.

“The size and scope of the alleged scheme is truly astounding. These defendants capitalized on both the allure of cryptocurrency and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi Scheme.”

Also, the duo reportedly laundered the proceeds of their ill-gotten funds through shell companies to buy luxury cars and real estate.

Suspects to Get $114,000 in Reimbursement

Following the arrest of the HashFlare co-founders, the US government sought to extradite the Estonian citizens to the United States. However, the latest development may prevent the handover from happening.

“In summary, the respondent had failed to take into account some important circumstances when assessing the proportionality of the extradition of the appellants. With this, a significant error of judgment was made, which may have led to a fundamentally wrong decision. The referred investigation obligation and consideration of significant circumstances cannot be carried out by the administrative court instead of the administrative authority.”

Meanwhile, the circuit court fined the Estonian government 46,365.30 euros ($50,809.65) and 50,710 euros ($55,531) to cover Turogin’s and Potapenko’s expenses.

In addition, Turogin and Potapenko’s families will get reimbursements of 4,080 euros (~$4,500)and 3,000 euros (~$330), respectively. The circuit court’s decision can be appealed by Dec. 11, 2023.