HashFlare Founders Admit Guilt in $575 Million Fraud Scheme
Sergei Potapenko and Ivan Turogin, co-founders of HashFlare, have pleaded guilty to conspiracy to commit wire fraud in a case involving a $575 million fraudulent scheme. The pair misled investors about HashFlare's mining operations, which operated more like a Ponzi scheme.
Key Points
- HashFlare was marketed as a cloud mining platform since 2015.
- Investigations revealed the company only mined a small amount of Bitcoin while misappropriating investor funds into shell companies.
- Investors received payouts primarily from new deposits instead of actual mining profits.
- The duo promoted a fake banking project, Polybius Bank, misleading victims into investing over $25 million.
- Funds were laundered through real estate and luxury assets in Europe.
- As part of the plea deal, they agreed to forfeit luxury vehicles, real estate, and millions in seized cryptocurrency.
- They had already repaid $350 million in cryptocurrencies to victims.
- Sentencing hearings are expected later this year.
This case highlights increasing regulatory scrutiny in the crypto industry, following other high-profile fraud cases pursued by US authorities.