In a major development, two Estonian nationals have pleaded guilty to their roles in a large-scale cryptocurrency fraud scheme that defrauded hundreds of thousands of investors worldwide, including many in the United States. Sergei Potapenko and Ivan Turõgin, both 40, operated the Ponzi scheme through their fake cryptocurrency mining service, HashFlare, which generated an estimated $577 million in sales between 2015 and 2019.
Potapenko and Turõgin sold mining contracts to investors, promising them returns based on cryptocurrency mining, primarily Bitcoin. However, HashFlare did not possess the necessary infrastructure to mine the amount of cryptocurrency it claimed to be generating. Instead, the duo falsified mining data on their website to deceive investors into thinking they were earning profits.
The funds raised from the scheme were used to purchase luxury real estate, expensive vehicles, and investments in cryptocurrency accounts. The two defendants have agreed to forfeit assets valued at over $400 million, which will be used to compensate the victims of the fraud once the remission process is established.
Both Potapenko and Turõgin have pleaded guilty to conspiracy to commit wire fraud. They face a maximum sentence of 20 years in prison when sentenced on May 8. The case, which involved international cooperation, was investigated by the FBI’s Seattle Field Office, with significant support from Estonian authorities, including the Cybercrime Bureau and the Ministry of Justice.
This case highlights the growing concerns surrounding cryptocurrency fraud schemes, with thousands of people falling victim to Ponzi operations that promise lucrative returns through mining. The Justice Department and FBI continue to encourage individuals who believe they may have been victims of this scheme to come forward via the FBI’s dedicated portal.
For more information on the case or to see if you may have been affected, visit the FBI’s official page at www.fbi.gov/hashflare.
