HashFlare Co-Founders Admit $550M Crypto Scam

HashFlare Co-Founder Pleads Guilty to Scam Involving Over $550 Million

In a significant development, Sergei Potapenko and Ivan Turogin, co-founders of the cryptocurrency mining service HashFlare, have pleaded guilty in the U.S. to conspiring to commit telecommunication fraud. The plea agreement, reached in a U.S. court, requires the duo to forfeit all digital assets frozen by the U.S. authorities.

The HashFlare operation, masterminded by Potapenko and Turogin, defrauded users of over $550 million between 2015 and 2019. In 2017, the pair raised $25 million from investors through a never-established fake digital bank called the Polybius project.

Both individuals were arrested in Estonia in 2022 and extradited to the U.S. in May 2024. They originally faced 18 charges but eventually pleaded guilty to one. The sentencing hearing is scheduled for May 8th, with a maximum possible sentence of 20 years in prison.

The HashFlare scam is a stark reminder of the risks associated with unregulated cryptocurrency markets. As the industry continues to grow, so too does the need for robust regulation and oversight to protect investors and consumers.