Two Estonian nationals have pleaded guilty in the United States to operating a $577 million cryptocurrency Ponzi scheme through their company, HashFlare.
The scam deceived hundreds of thousands of investors worldwide, falsely promising cryptocurrency mining profits.
How the Scheme Worked
Between 2015 and 2019, Sergei Potapenko and Ivan Turõgin, both 40, sold contracts through HashFlare, claiming customers would earn a share of cryptocurrency mined by the company.
In reality, HashFlare lacked the computing power to mine the promised amounts.
Investors were shown fake profit data on a web-based dashboard while Potapenko and Turõgin pocketed the funds, using them to buy real estate, luxury cars, and cryptocurrency investments.
Legal Consequences & Victim Compensation
Both men pleaded guilty to conspiracy to commit wire fraud and face up to 20 years in prison. They have agreed to forfeit over $400 million, which will be used to compensate victims.
Details on the remission process will be announced later. Their sentencing is scheduled for May 8.
International Investigation & Prosecution
The FBI Seattle Field Office led the investigation, with assistance from the Estonian Police and Border Guard, the Estonian Prosecutor General, and the U.S. Justice Department’s Office of International Affairs.
Prosecutors include:
- Adrienne E. Rosen & David Ginensky, DOJ Money Laundering and Asset Recovery Section
- Andrew Friedman & Sok Jiang, Assistant U.S. Attorneys, Western District of Washington
- Jehiel Baer, Assistant U.S. Attorney, handling asset forfeiture
Victims seeking restitution can visit www.fbi.gov/hashflare.
