Two HashFlare operators, Sergei Potapenko and Ivan Turõgin, have admitted to operating a $577 million Ponzi fraud scheme, faking cryptocurrency mining operations.
HashFlare founders plead guilty to $577 million cryptocurrency fraud
HashFlare: From Crypto Mining Service to Ponzi Fraud
According to the U.S. Department of Justice (DOJ), the two co-founders of the Bitcoin mining company HashFlare, Sergei Potapenko and Ivan Turõgin, have pleaded guilty to operating a Ponzi scheme worth $577 million through this platform.
After HashFlare ceased operations in 2018 and officially closed down, Potapenko and Turõgin "pocketed" over $577 million in revenue from investors. They were arrested in Tallinn (the capital of Estonia) in November 2022 and extradited to the U.S. with 16 charges including conspiracy to commit fraud/money laundering and wire fraud.
Two Estonian Nationals Plead Guilty in $577M Cryptocurrency Fraud Scheme
— Criminal Division (@DOJCrimDiv) February 13, 2025
Scheme Victimized Hundreds of Thousands of People in United States and Abroad
🔗: https://t.co/hsedkgnOtN pic.twitter.com/SsSChivnXv
The Two Founders Face Up to 20 Years in Prison
Operating from 2015 to 2019, HashFlare (previously known as HashCoins - a coin mining equipment manufacturer) provided cloud-based crypto mining services, allowing users to rent hash power without owning the hardware. Participating investors would deposit funds into the project and receive profits of up to 150% from the mining.
However, according to the DOJ, the platform actually mined less than 1% of the total hash rate advertised to customers. Furthermore, HashFlare even solicited users to invest in a fraudulent crypto banking project called Polybius, but failed to pay dividends to customers, constantly making excuses to "avoid" payment obligations when users tried to withdraw, with various reasons including forcing users to undergo extensive KYC verifications to increase withdrawal limits.
According to the indictment, the fraudulent funds were used by Sergei Potapenko and Ivan Turõgin, under the guise of the company, to launder money, pay for 75 real estate properties, 6 luxury vehicles, invest in crypto accounts, and thousands of cryptocurrency mining devices with a total value of over $577 million - considered one of the largest cryptocurrency fraud cases in history. This resulted in hundreds of thousands of victims worldwide, including users in the U.S., suffering losses of over $577 million.
Both defendants have pleaded guilty and agreed to forfeit assets worth over $400 million to compensate the victims through an upcoming restitution process.
Potapenko and Turõgin will be sentenced on May 8th and face up to 20 years in prison. The investigation was led by the FBI office in Seattle, with the cooperation of multiple law enforcement agencies and U.S. prosecutors.
Compiled by Coin68
