Sergei Potapenko and Ivan Turõgin, both 40 and hailing from Estonia, have admitted guilt in connection with a large-scale Ponzi scheme that defrauded “hundreds of thousands” of victims worldwide through cryptocurrency assets.
The U.S. Department of Justice (DOJ) has revealed that the pair will forfeit over $400 million in assets acquired through their fraudulent operations.
Operating under the name “HashFlare,” Potapenko and Turõgin sold contracts that promised clients a share of cryptocurrency purportedly mined by their business. However, court documents indicate that HashFlare lacked the necessary computational resources to perform the mining it claimed, misleading customers into believing they were making legitimate investments.
From 2015 to 2019, HashFlare reportedly generated sales exceeding $577 million, yet the company did not have the mining capabilities it advertised. A dashboard meant to display mining profits instead showed falsified data, creating a false impression of profitable returns. The defendants allegedly used the proceeds from their scheme to acquire luxury real estate, high-end vehicles, and maintain cryptocurrency investment accounts.
Compensation Plan for Victims Revealed
As part of their guilty pleas, Potapenko and Turõgin have accepted accountability for their actions and agreed to forfeit assets valued at over $400 million. These funds will be allocated for a remission process designed to compensate the victims of their fraudulent activities, with further details to be announced by authorities in the future.
This case is part of a broader effort to combat financial crimes involving cryptocurrency. Recently, U.S. law enforcement, in collaboration with international partners, charged two individuals linked to a multi-billion-dollar money laundering operation involving stolen credit card data and ransomware profits. Authorities successfully disrupted three cryptocurrency exchanges primarily used for criminal activities, including those associated with ransomware groups and darknet drug trafficking.
Both Potapenko and Turõgin pleaded guilty to one count of conspiracy to commit wire fraud, a charge that carries a potential maximum prison sentence of 20 years. Their sentencing is set for May 8, when a federal judge will impose penalties based on U.S. Sentencing Guidelines and various mitigating factors.
Shogun Lin
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