HashFlare Cryptocurrency Scam: $577 Million Ponzi Scheme Exposed

Two Estonian nationals, Sergei Potapenko and Ivan Turõgin, have pleaded guilty to running a massive $577 million cryptocurrency Ponzi scheme through HashFlare, a fraudulent cryptocurrency mining platform. The scheme, which defrauded hundreds of thousands of individuals globally, lasted from 2015 to 2019.

The two men, both 40 years old, were arrested in November 2022 and later extradited to the United States in May 2024. They were charged with conspiracy to commit wire fraud, a crime that carries a maximum sentence of 20 years in prison. They are also required to forfeit assets worth over $400 million as part of a plea agreement. The funds recovered will be used to compensate the victims of the fraud, with further details about the reimbursement process to be disclosed by the U.S. Department of Justice (DoJ).

Potapenko and Turõgin operated the fraudulent scheme through HashFlare.io, where they sold cryptocurrency mining contracts to investors. They promised customers returns based on cryptocurrency generated by the platform. However, the men misrepresented the mining capacity of HashFlare, fabricating data to give the false impression that investors were earning significant profits, when in reality, HashFlare lacked the resources to mine at the advertised scale.

The two men siphoned off vast sums from the scheme, which they used to purchase luxury items such as real estate and high-end vehicles, and also invested in cryptocurrencies and other assets. The $577 million figure reflects the total sales from the scam, though much of the proceeds were misappropriated by the perpetrators.

The U.S. Department of Justice credited the Estonian Cybercrime Bureau, the Estonian Prosecutor General, and the Ministry of Justice and Digital Affairs for their help in the investigation and the extradition process. The Federal Bureau of Investigation (FBI) has encouraged victims of the HashFlare fraud to come forward.