- Two Estonians Arrested for Allegedly Committing Crypto Fraud Worth Over $575 Million
- The Defendants Are the Figures Behind the Now Defunct Bitcoin Cloud Mining Service Provider – HashFlare
- They would have used the money to buy real estate and luxury cars
The United States Department of Justice (DoJ) announced the arrest of two Estonians in the capital, Tallinn. The department accused them of committing crypto fraud and money laundering. The fraudsters – Sergei Potapenko and Ivan Turõgin – were the minds behind the now defunct Bitcoin cloud mining service provider – HashFlare.
The Estonians are accused of defrauding investors out of $575 million worth of crypto schemes. The Federal Bureau of Investigation (FBI) has taken over the investigation into this case and is looking for potential victims of HashFlare. In addition, if found guilty of committing these crimes, the accused faces 20 years in prison.
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Defunct-Bitcoin Mining Service Would Bring Home Millions of Dollars
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 filed for bankruptcy in August 2019, citing the crypto bear market and unprofitable bitcoin mining as the reason. And, since the platform operated on an annual contract, a lot of people stood to lose money because the company’s terms and conditions allowed it to end contracts without issuing refunds.
The latest information provided by the DoJ alleges that Hashflare does not have the mining equipment it claimed to have in the first place. The press release reads further,
“When investors requested to withdraw their mining proceeds, Potapenko and Turõgin were unable to pay for the mined currency as promised. Instead, they either withheld payments or paid investors using the virtual currency the defendants had purchased on the open market, not the currency they had mined.
Notably, the defendants were arrested not only for their involvement with HashFlare but also Polybius, a platform allegedly operating as a cryptocurrency bank. The accused raised nearly $25 million from investors on the promise to pay them dividends for Polybe.
However, the dividends were never paid. And, the collected money was transferred to other bank accounts and wallets controlled only by the accused. Potapenko and Turõgin then allegedly laundered some of those funds to front companies to buy nearly 75 real estate properties and luxury cars.