HashFlare founders have been arrested in Estonia over their alleged involvement in a $575 million crypto fraud conspiracy.
HashFlare was a cloud mining company created in 2015, which purported to allow customers to lease the company’s hashing power in order to mine cryptocurrencies and gain an equivalent share of its profits.
The company was seen as one of the leading names in the business at the time, but shut down a large portion of its mining operations in Jul. 2018. However, according to a statement from the United States Department of Justice citing court documents, the entire mining operation, run by founders Sergei Potapenko and Ivan Turõgin, was part of a multi-faceted scheme that defrauded hundreds of thousands of victims.
This included convincing victims to enter into fraudulent equipment rental contracts through HashFlare and persuading other victims to invest in a fake virtual currency bank called Polybius Bank.
The pair is also accused of conspiring to launder their criminal proceeds through 75 properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines.
The HashFlare founders have been charged with conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering using shell companies and fraudulent invoices and contracts, and could face up to 20 years in prison if convicted.
