Two Estonian nationals, Sergei Potapenko and Ivan Turõgin, aged 39, appeared in court for the first time following their arrest in Tallinn, Estonia in November 2022. They are accused of multiple criminal charges linked to their alleged involvement in a large-scale cryptocurrency fraud.
According to the Department of Justice, the indictment states that from 2015 to 2019, the duo operated HashFlare, a fraudulent cryptocurrency mining service. They purportedly enticed hundreds of thousands of victims to purchase contracts totaling over $550 million, promising shares of virtual currency mined by HashFlare. However, the DOJ claims that HashFlare's actual mining capacity was minimal, conducting less than 1% of the advertised Bitcoin mining.
When investors attempted to withdraw their supposed mining profits, Potapenko and Turõgin allegedly resisted payments or used virtual currency purchased on the open market instead of mined currency as promised. Additionally, in May 2017, they allegedly raised at least $25 million through investments in Polybius, a company purported to establish a virtual currency bank. Despite assurances of dividends from Polybius' profits, the bank was never set up, and most funds were allegedly diverted to accounts controlled by the defendants.
The DOJ also accuses them of laundering proceeds through shell companies, fake contracts, and invoices, using the funds to acquire 75 real estate properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines. The charges against them include conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering, each carrying a maximum penalty of 20 years in prison.
May 2024, Cryptoniteuae