The two HashFlare founders are accused of leading a scam of more than $ 570 million

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2022-11-25 08:32:57

On November 21, prosecutors in Washington state charged HashFlare founders Sergei Potapenko and Ivan Turogin with leading a series of cryptocurrency scams, with an estimated total of $575 million. from hundreds of thousands of investors around the world.

The two founders of HashFlare are accused of leading a series of scams, draining more than $ 570 million

The indictment states that Sergei Potapenko (37) and Ivan Turogin (37) used the cover of companies to carry out money laundering. Specifically, the two paid for 6 luxury cars, 75 real estate projects, crypto wallets and thousands of crypto mining devices.

The indictment is summarized as follows:

– December 2013: The first company launched as HashCoins, supposedly a manufacturer of mining equipment. However, the devices have been accused of being “acquired” from a second-hand market and then sold at a higher price. HashCoins has never produced anything.

– May 2015: After the “selling second-hand” case broke and was repeatedly complained, Potapenko and Turogin closed HashCoins and established a second company, HashFlare; change business model to “remote mining service”. It is announced that depositors will receive a “part of the profits” from mining.

HashFlare was denounced by customers when the contract payment amount was lower than the service fee, resulting in the balance not being accumulated in the account. In addition, to facilitate bypassing payment obligations when customers try to withdraw money, Potapenko and Turogin used many reasons to explain the inability to withdraw, or forced customers to perform multiple KYC verifications to increase withdrawal limit.

In fact, HashFlare mined less than 1% of the total hashrate sold to customers, allegedly as a Ponzi scheme rather than actual mining.

– June 2017: Launched an ICO round for a crypto project called Polybius, raising $25 million from global investors. The project “disappeared” right after that while neither principal nor interest was paid to investors.

– In 2018: HashFlare announced the shutdown, citing rising costs and mining operations that are no longer profitable. However, Potapenko and Turogin allegedly continued to mine for themselves, using money stolen from customers to pay for mining.

– August 2019: HashFlare closed, Potapenko and Turogin now had a total of $550 million and fled.

– November 20, 2022: Both Potapenko and Turogin were arrested in Tallinn, Estonia.

Potapenko and Turogin were charged with conspiracy to commit fraud, 16 counts each of fraud, each of which was linked to money laundering.

The next trial for the two defendants will take place in the Western District of Washington. For the above crimes, the two HashFlare founders could face up to 20 years in prison.

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