Estonia accepts court's decision annulling crypto suspects' extradition to US

Sergei Potapenko (left) ja Ivan Turõgin (right). Photo: Taavi Sepp / kollaaž

Estonia's Justice Minister Kalle Laanet said on Thursday that the state accepts the Tallinn Circuit Court's decision overturning the government's decision to extradite two crypto businessmen suspected of crimes to the United States, but it cannot be said yet that the two suspects have escaped extradition.

Laanet said the European Union and the United States signed an agreement on the extradition of suspects, defendants and sentenced persons back in 2003, and Estonia signed a similar agreement in May 2006. Between 2016 and 2023, Estonia has extradited more than 20 individuals to the United States under this agreement.

«However, not always does a person convicted in the US have to serve their sentence on US soil, and in many cases, when a person has expressed the wish to serve their sentence in Estonia, it has been done so,» Laanet said at Thursday's government press briefing.

He said the government decided not to challenge the appellate court's Nov. 29 decision by which the court overturned the government's earlier decision to extradite the two crime suspects to the US.

«At the same time, [we] have the right to initiate new administrative proceedings to remedy the shortcomings identified by the Tallinn Circuit Court. And the court pointed out that the government has not sufficiently examined the conditions of imprisonment in US prisons. And we have already made a request to the US and received one reply. And we are going into more detail with it,» said Laanet.

The minister said Estonia also has a justice attache in the US, Indrek Tibar, who can physically review whether the conditions of imprisonment there correspond to what we can expect.

The Ministry of Justice said in a separate comment on Thursday that the circuit court annulled specific administrative acts, but this does not mean that the whole extradition procedure is terminated or annulled.

«Today, the government decided not to appeal the circuit court's decision, but it will reconsider the extradition of the two citizens in the light of it. To that end, the items highlighted by the circuit court will be evaluated. The US extradition requests are in force and the extradition procedure continues,» the ministry added.

The Tallinn Circuit Court on Wednesday annulled the decisions to extradite Estonian crypto businessmen Ivan Turogin and Sergei Potapenko, who are accused of an electronic scam and entering into criminal agreements in the United States, to the US.

The US Department of Justice submitted a written request to the Republic of Estonia for the extradition of Estonian citizens Ivan Turogin and Sergei Potapenko to the US.

With its Sept. 7 orders, the Estonian government decided to extradite the men to the US based on an extradition agreement between the Estonian and US governments.

With its Wednesday ruling, the circuit court annulled the rulings of the Tallinn Administrative Court made on Oct. 18 and issued new rulings with which it satisfied the appeals. The circuit court annulled the government's orders.

The circuit court found that the government had failed to investigate and consider important circumstances in making the decision, which could have influenced the decision to extradite the men.

The court noted that with regard to the conditions of detention, the respondent has taken the position in the order that these issues should have been raised in the procedure for declaring the extradition legally permissible in the county court, which the appellants did not do, therefore the government did not dwell on this issue. However, according to the circuit court, this position was incorrect.

The government, after it was convinced that the extradition of the appellants was legally permissible, was obliged to consider all relevant circumstances in the case when making a decision and to assess the proportionality of the decision, that is the infringement on the fundamental rights of the individuals. Thus, as part of the proportionality assessment of extradition, the government also had to evaluate the applicants' claims about their possible conditions of imprisonment in the United States.

These were not questions related to the control of legal admissibility concerning criminal law or criminal procedure. The respondent's representative confirmed at the circuit court hearing that no such investigation and consideration was carried out, and the same could be seen from the contested orders.

The circuit court emphasized, relying on the relevant practice of the European Court of Justice and the European Court of Human Rights, that the respondent could not rely solely on the fact that the United States is a country governed by the rule of law and that Estonian citizens have also been extradited there in the past.

According to the circuit court, the government's orders had to be annulled on the grounds that there had been a substantial breach of duty to investigate, and the applicants' claims and submitted evidence regarding the conditions of detention in the United States detention facility the applicants would most likely be placed in after extradition had been left unverified.

It had also not been checked whether the extradition would infringe the basic rights of the appellants to the extent that criminal proceedings in Estonia should be considered instead of extradition.

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.

The court explained that while the decision on which country to conduct the criminal proceedings in is made by the prosecutor's office at the beginning of the extradition procedure, this does not exclude the government's competence to assess the violation of fundamental rights arising from such a decision and the proportionality of the extradition.

Since the circuit court annulled the rulings of the administrative court and issued new rulings that satisfied the complaints, the respondent was also ordered to cover the costs of the proceedings. The court ordered the government to pay 46,365.30 euros to cover the first and second instance procedural costs of Ivan Turogin and 50,710 euros to cover the expenses of Sergei Potapenko.

Also, both families were awarded procedural costs of 4,080 euros and 3,000 euros, respectively. In the remaining part, the procedural costs were borne by them.

The Estonian government on Sept. 7 approved the extradition of Estonian businessmen Ivan Turogin and Sergei Potapenko, who are accused of an electronic scam and entering into criminal agreements in the United States, to the US.

In late November of last year, the Estonian police and the US Federal Bureau of Investigation apprehended the men in Tallinn on an 18-count indictment for their alleged involvement in a 575-million-dollar cryptocurrency fraud and money laundering conspiracy.

According to court documents, Sergei Potapenko and Ivan Turogin allegedly defrauded hundreds of thousands of victims through a multi-faceted scheme. They induced victims to enter into fraudulent equipment rental contracts with the defendants' cryptocurrency mining service called HashFlare.

The company had hundreds of thousands of customers around the world and potential damage amounts to more than half a billion euros.