Two men have been arrested in Estonia for allegedly defrauding hundreds of thousands of investors to the tune of $575 million (€562 million) through a bogus cryptocurrency scheme.

The suspects were arrested on Sunday as part of a joint operation between Estonian police and the FBI in the US that involved more than 100 officers.

"This is one of the largest fraud cases we've ever had in Estonia," said Oskar Gross, head of the Estonian police force's cybercrime bureau.

Washington has requested extradition of the two men, the police said in a statement.

Authorities slam 'Ponzi scheme'

Police allege that the men tricked hundreds of thousands of people to invest in a cryptocurrency bank called Polybius Bank and buy contracts for a mining service called HashFlare between 2015 and 2019.

However, prosecutors said these businesses operated as pyramid schemes.

"These defendants capitalized on both the allure of cryptocurrency, and the mystery surrounding cryptocurrency mining, to commit an enormous Ponzi scheme," Seattle US Attorney Nick Brown said.

Police added that "fraud proceeds were allegedly laundered through real estate purchases and shell companies."

Four other people living in Estonia, Belarus and Switzerland were also charged, but their identities were not released.

zc/wmr (AP, AFP)