- Two Estonians were arrested for allegedly committing crypto fraud worth over $575 million
- The accused are the figures behind now-defunct Bitcoin cloud-mining service provider – HashFlare
- They allegedly used the money to purchase real estate and luxury cars
The United States Department of Justice (DoJ) announced the arrest of two Estonians in the capital city – Tallinn. The department has accused them of committing crypto fraud and laundering money. The defrauders – Sergei Potapenko and Ivan Turõgin – were the minds behind now-defunct Bitcoin cloud mining service provider – HashFlare.
The Estonians are accused of defrauding investors off of $575 million in crypto schemes. The Federal Bureau of Investigation (FBI) has taken over the investigation of this case and is seeking potential victims of HashFlare. Moreover, if found guilty of committing these crimes, the accused stand to face 20 years of prison time.
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Defunct-Bitcoin mining service allegedly takes millions of dollar home
The crypto mining service provider was a subsidiary of HashCoins OU. The platform provided cloud mining services for Bitcoin, Ethereum, Litecoin, DASH, and ZCash. It went under in August 2019, citing the crypto bear market and the unprofitability of Bitcoin mining as the reason. And, given that the platform functioned on a yearly contract, a lot of people stood to lose money as the firm’s T&C allowed it to end contracts without making any refunds.
The latest information provided by the DoJ alleges Hashflare of not having the mining equipments it claimed to have in the first place. The press release further read,
“When investors asked to withdraw their mining proceeds, Potapenko and Turõgin were not able to pay the mined currency as promised. Instead, they either resisted making the payments, or paid off the investors using virtual currency the defendants had purchased on the open market—not currency they had mined.”
Notably, the accused were pulled up not only for their involvement in HashFlare but also Polybius, a platform that would function as a cryptocurrency bank. The accused raised nearly $25 million from investors over the promise of paying them in dividends for Polybius.
However, the dividends were never delivered. And, the raised money was transferred to other bank accounts and wallets controlled solely by the accused. Potapenko and Turõgin allegedly then laundered part of these funds to shell companies to purchase nearly 75 real estate properties and luxury cars.
