Local police in Tallinn detained Turogin and Potapenko on November 20, 2022, after receiving a request from the Federal Bureau of Investigation (FBI). Charged with 18 counts by the US Department of Justice, the businessmen could potentially face up to 20 years in a federal prison if found guilty.
Estonian citizens Ivan Turogin and Sergey Potapenko founded HashFlare and the digital bank Polybius several years ago. Through HashFlare, clients were offered the opportunity to rent capacity for cryptocurrency mining with the promise of receiving a percentage of the profits. However, instead of distributing mining proceeds, Turogin and Potapenko used the funds to acquire assets. HashFlare ceased operations in 2019.
Similarly, Polybius Bank raised funds from investors under the pretext of dividend payments derived from profits. Despite collecting $25 million in investments, Polybius Bank never commenced operations.
According to American law enforcement officials, Turogin and Potapenko funneled funds from clients of Polybius Bank and HashFlare through front structures to controlled bank accounts and cryptocurrency wallets.
Extradition attempts were previously made by Estonian authorities in the fall of 2023; however, the Tallinn District Court overturned the decision due to inadequate examination of detention conditions and violations in the extradition process. The court cited the European Court of Human Rights’ precedents. The Estonian Ministry of Justice now believes that they have gathered enough arguments to finally extradite the detainees to the United States of America.