"Estonian Duo Plead Guilty to $577M Crypto Ponzi Scheme"

The U.S. Department of Justice (DOJ) has announced that two Estonian nationals, Sergei Potapenko and Ivan Turõgin, have pleaded guilty to operating a massive cryptocurrency Ponzi scheme. The scheme, which defrauded hundreds of thousands of victims worldwide, including in the United States, involved the sale of contracts that promised customers a share of the cryptocurrency mined by their purported crypto mining service, HashFlare.

Court documents reveal that from 2015 to 2019, HashFlare generated over $577 million in sales, despite not having the necessary computing capacity to perform most of the mining claimed. The defendants also falsified data on HashFlare's web-based platform, which was supposed to show customers their mining profits.

Potapenko and Turõgin used the proceeds of the scheme to purchase luxury cars and real estate, as well as maintain investment and cryptocurrency accounts. On February 12th, both men pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison.

As part of their guilty plea, the duo agreed to forfeit assets valued at over $400 million, which will be available for a remission process to compensate victims of their fraud scheme. A federal district court judge will issue the sentence on May 8th.