In a recent development, the Tallinn Circuit Court in Estonia has overturned a lower court’s decision to extradite two individuals accused of running a cryptocurrency Ponzi scheme to the United States. The accused, associated with the cloud miner HashFlare, faced 18 counts of fraud and money laundering in the U.S.
HashFlare, operational from 2015 to 2019, allegedly defrauded hundreds of thousands of victims, accumulating a total of $575 million. The company, purporting to lease hashing power for crypto mining, also promoted investments in a fictitious bank. The U.S. Justice Department had indicted the individuals, and if convicted, they could each face up to 20 years in prison.
The accused, Turogin and Potapenko, both Estonian citizens, were arrested in Estonia following the indictment in November 2022. The Estonian government had initially approved their extradition in September. The investigation involved collaboration between Estonian authorities and 15 Americans, constituting one of the largest fraud cases in the country’s history.
The defense team successfully presented evidence concerning the conditions of detention in the United States, which the government had reportedly overlooked. They also raised concerns about procedural irregularities in the extradition orders. The Tallinn Circuit Court, citing practices from the European Court of Justice and the European Court of Human Rights, overturned the extradition orders.
As a result of the court’s decision, Turogin, Potapenko, and their families are set to receive over 100,000 euros ($110,000) in reimbursement. The ruling is subject to appeal until December 11.
This legal episode comes against the backdrop of Estonia’s strengthened Anti-Money Laundering laws, which led to the closure of nearly 400 virtual asset service providers in May, including increased regulatory measures such as the implementation of the Financial Action Task Force’s Travel Rule.