The founders of HashFlare, a cloud mining service, Sergei Potapenko and Ivan Turygin, have pleaded guilty to running a cryptocurrency Ponzi scheme. U.S. authorities will seize over $400 million in assets from them.

Two Estonian Nationals plead guilty in $577M cryptocurrency fraud scheme – Scheme victimized hundreds of thousands of people in the U.S. and abroad https://t.co/blfJy3wytw
— WDWAnews (@WDWAnews) February 13, 2025

According to the U.S. Attorney’s Office for the Western District of Washington, the Estonian nationals sold contracts that allegedly entitled customers to a share of HashFlare’s mined cryptocurrency.

Between 2015 and 2019, they raised over $577 million, but the company lacked the computing power to fulfill its promises. Instead, HashFlare’s web panel displayed fake mining profits to deceive users.

Potapenko and Turygin used the fraudulent proceeds to buy real estate, luxury cars, and fund investment and crypto accounts.

In November 2022, Tallinn police arrested the HashFlare founders at the FBI’s request. They were charged with conspiracy to commit fraud and money laundering. In January 2024, Estonia approved their extradition to the U.S..

Both have now pleaded guilty to one count of conspiracy to commit fraud. Sentencing is set for March 8, with each facing up to 20 years in prison.

The $400 million in seized assets will be used to compensate victims. U.S. authorities will release further details on the restitution process later.

Reminder: In August 2024, Turkish authorities arrested a suspect involved in the $4 billion OmegaPro crypto pyramid, which was reportedly linked to OneCoin, one of the biggest scams in crypto history with a similar $4 billion loss.