HashFlare Founders Plead Guilty to Wire Fraud, Agree to Forfeit Assets
Sergei Potapenko and Ivan Turõgin pleaded guilty to a wire fraud conspiracy while nearly 20 other charges were dropped. They will forfeit assets and assist in victim reimbursement, but their sentencing is pending.
Key points:
- HashFlare, previously a cloud mining business, was accused of defrauding investors of $575 million.
- The fraudulent operation ran from 2015 to 2018, misleading users about mining profits.
- Funds were used to purchase crypto instead of generating real mining income.
- The FBI reported that HashFlare shut down after 28 days of unprofitability.
- The defense claimed no actual harm occurred to customers.
- The prosecution's case weakened due to overestimated damages and loss of credibility of a key witness.
- Potapenko and Turõgin surrendered frozen assets including luxury cars and real estate.
The final sentence for the founders remains uncertain, despite their guilty plea potentially mitigating harsh penalties.