The founders of the cloud mining service HashFlare, Sergei Potapenko and Ivan Turõgin, have admitted to orchestrating a cryptocurrency pyramid scheme. U.S. authorities will confiscate assets from them valued at over $400 million.
Two Estonian Nationals plead guilty in $577M cryptocurrency fraud scheme — Scheme victimized hundreds of thousands of people in the U.S. and abroad https://t.co/blfJy3wytw
— WDWAnews (@WDWAnews) February 13, 2025
According to a statement from the U.S. Attorney’s Office for the Western District of Washington, the defendants, Estonian nationals, offered clients contracts granting them a share of the purportedly mined cryptocurrency by HashFlare.
From 2015 to 2019, sales exceeded $577 million. However, the company lacked sufficient computing power to fulfill its promises. The service’s web panel displayed fictitious data on users’ mining profits.
Potapenko and Turõgin used proceeds from the fraudulent scheme to purchase real estate and luxury cars, as well as to maintain investment and cryptocurrency accounts.
Tallinn police arrested the founders of HashFlare in November 2022 at the request of the FBI. They were charged with conspiracy to commit fraud and money laundering. In January 2024, Estonian authorities decided to extradite Potapenko and Turõgin to the U.S.
The founders of HashFlare pleaded guilty to one count of conspiracy to commit fraud. Sentencing is scheduled for March 8, with each facing up to 20 years in prison.
The seized assets of $400 million will be used to compensate victims of the fraudulent scheme. U.S. authorities will disclose further details of the process later.
In August 2024, Turkish authorities detained one of the suspects in organizing the $4 billion OmegaPro crypto pyramid. The scam is allegedly linked to OneCoin — one of the largest frauds in the industry’s history with similar damages.