Estonia to extradite crypto businessmen to United States

Crypto businessmen Ivan Turogin and Sergei Potapenko.
Crypto businessmen Ivan Turogin and Sergei Potapenko. Photo: Taavi Sepp / Shutterstock Kollaaž: Mihkel Maripuu

On Friday, the Supreme Court of Estonia decided not to hear the appeals of crypto businessmen Ivan Turogin and Sergei Potapenko, so the decision of the Tallinn Circuit Court of April 22 to extradite the men accused of cyber fraud and money laundering to the United States came into force.

The Tallinn appellate court found in the April 22 decision that there was no basis for canceling the Estonian government's Jan. 25 order for the men's handover and that Potapenko and Turogin can be extradited to the United States.

Previously, the Tallinn Administrative Court had reached a similar decision on March 11. The court also ordered procedural costs to be borne by the parties themselves.

The circuit court found that according to the reasons for the extradition order, there was no reason to doubt that the US has the interest, opportunities and sufficient resources to process the criminal case in the US. Estonia does not have the equivalent interest and resources to process such a criminal case. According to the opinion of the Estonian prosecutor's office, the interest of the US in prosecuting the case is greater than that of Estonia, considering the main location of the acts, damage and victims. According to the circuit court, the government has sufficiently and appropriately justified why continuing criminal proceedings against the men in the US, not in Estonia, should be enabled.

The circuit court agreed with the government's conclusion that, although the extradition of the men is a rather intense violation of several important fundamental rights, it is still a moderate measure given the importance of the goal sought.

The circuit court agreed with the administrative court's finding that, according to the government's evidence, the Federal Bureau of Prisons' statutes governing the operation of prisons provide for conditions of detention that broadly meet the humane treatment requirement. Nor do prisons of the Federal Bureau of Prisons systematically ignore US law and accept conditions of detention that are inconsistent with the principles of the Convention for the Protection of Human Rights and Fundamental Freedoms. According to the circuit court, the risk of men being detained in degrading conditions is not so serious and real as to preclude their extradition to the US.

In summary, the circuit court found that there is no basis for overturning the government's Jan. 25 order.

The government has taken into account the guidelines given in the circuit court's previous ruling of Nov. 29, 2023, on which circumstances need to be further analyzed when deciding whether to extradite the men. According to the court, there is no reasonable basis to believe that there is a real risk that the applicants may be threatened with inhumane or degrading treatment in the US contrary to Article 3 of the Convention for the Protection of Human Rights and Fundamental Freedoms.

The court noted that, in other respects, the government had a wide margin of discretion when making the decision and did not make significant errors of judgment and did not err against the norms of administrative procedure to such an extent that the contested order should be annulled.

According to Potapenko and Turogin, who contested the government's order, and their family members, the extradition norms were against the Constitution, because the division of competences is unclear and too short deadlines do not guarantee the persons to be extradited the opportunity to defend themselves effectively.

The Estonian government decided on Jan. 26 for the second time that the two crypto businessmen are to be extradited to the United States. The first decision was made on Sept. 7, 2023; however, it was annulled by the Tallinn Circuit Court on Nov. 29, due to, among other things, the government failing to ascertain the acceptability of the conditions of incarceration in the United States as a significant factor in their decision.

In the context of the decision made in January, the government said the Ministry of Justice has found that sufficient evidence has been collected to ensure that the infringement of the individuals' fundamental rights due to extradition is not disproportionate. The ministry concluded that the conditions for the extradition of the men have been met.

Justice Minister Kalle Laanet said at the time that there were no external or limiting circumstances regarding the extradition of either individual.

"The government has concluded that extraditing these citizens to the United States is justified, in line with the principles of the rule of law, and does not disproportionately violate the citizens' rights," Laanet said.

The concerns raised by the Tallinn Circuit Court, which led to the annulment of the government's previous decision, were taken seriously by the Ministry of Justice. The justice minister affirmed that the deficiencies alleged by the court had been reviewed and addressed. Among other things, a representative of Estonia inspected the detention conditions at the US detention facility where the two citizens would be placed after extradition.

"At the court's request, we made sure that being in the US detention facility does not lead to violations of fundamental rights that would give us cause to refuse extradition. The conditions there are humane and legal," the minister said.

The Estonian police and the US Federal Bureau of Investigation apprehended the men in Tallinn in November 2022 on an 18-count indictment for their alleged involvement in a 575-million-dollar cryptocurrency fraud and money laundering conspiracy. According to court documents, Potapenko and Turogin allegedly defrauded hundreds of thousands of victims through a scheme described by US authorities as a Ponzi 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.