HashFlare Co-Founders Admit $577M Crypto Mining Scam

HashFlare Co-Founders Plead Guilty in $577M Crypto Mining Ponzi Scheme

The co-founders of Hashflare, a crypto mining ponzi scheme that defrauded hundreds of thousands of investors worldwide, have pleaded guilty to conspiracy to commit wire fraud. Sergei Potapenko and Ivan Turõgin, both 40, were arrested in Estonia in November 2022 and extradited to the U.S. on an 18-count indictment. On Wednesday, they pleaded guilty to one count each of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison.

Between 2015 and 2019, Potapenko and Turõgin lured Hashflare's investors to rent a percentage of the scheme's crypto mining operations in exchange for a share of the cryptocurrency produced. However, Hashflare had only a tiny fraction of the mining equipment it claimed to have, less than 1% of the computing power sold. When investors sought their proceeds, the men either resisted payments or paid them back with crypto purchased on the open market.

Potapenko and Turõgin's lawyers argue that none of Hashflare's investors suffered financial harm, stating that the men's only crime was lying about the size of Hashflare's mining operation. The men used their victims' money to make real estate investments and purchase luxury cars. As part of the plea agreement, they agreed to forfeit assets valued over $400 million to compensate investors.

Potapenko and Turõgin will be sentenced in a Seattle court on May 8. This case serves as a stark reminder of the risks associated with unregulated and unvetted crypto investment schemes, and the importance of thorough due diligence before investing in the crypto market.