HashFlare Co-Founders Plead Guilty in $577M Crypto Mining Ponzi Scheme

Estonian nationals Sergei Potapenko and Ivan Turõgin each look a maximum condemnation of 20 years successful prison.

Feb 13, 2025, 7:43 p.m. UTC

The co-founders of Hashflare, a crypto mining ponzi strategy that stole $577 cardinal from hundreds of thousands of investors astir the world, some pleaded blameworthy connected Wednesday to conspiracy to perpetrate ligament fraud.

Sergei Potapenko and Ivan Turõgin, some 40, were arrested successful their autochthonal Estonia successful November 2022 and extradited to the U.S. connected an 18-count indictment. Yesterday, some men pleaded blameworthy to 1 number each of conspiracy to perpetrate ligament fraud, which carries a maximum condemnation of 20 years successful prison.

Between 2015 and 2019, Potapenko and Turõgin convinced Hashflare’s investors to rent a percent of the scheme’s crypto mining operations successful speech for a percent of the cryptocurrency Hashflare produced. But, according to tribunal documents, Hashflare had lone a tiny fraction of the mining instrumentality it purported to person – less than 1% of the computing powerfulness Potapeno and Turõgin had sold. When investors tried to assertion their proceeds, prosecutors accidental the 2 men either resisted making payments by making excuses oregon paid them backmost with crypto purchased connected the unfastened market.

Read more: Two Estonians Charged With Running a Series of Crypto Scams Totaling $575M

Potapenko and Turõgin’s lawyers accidental that nary of Hashflare’s investors suffered fiscal harm, telling CoinDesk that the men’s lone transgression was lying astir the size of Hashflare’s mining operation.

“Ivan and Sergei ran palmy businesses, providing existent services, employing astir 100 Estonians, and doing charitable enactment successful Estonia. As Ivan admitted [Wednesday], 1 of his and Sergei’s businesses promised to excavation crypto and did successful information excavation crypto, but not arsenic overmuch arsenic it had promised; instead, it sometimes repaid customers with crypto it had purchased connected the unfastened market,” said Andrey Spektor, spouse astatine Norton Rose Fulbright US LLP and counsel to Turogin.

“Importantly, however, arsenic we volition amusement astatine sentencing, nary lawsuit has suffered immoderate harm. Ivan and Sergei look guardant to returning to Estonia and resuming their lives.”

According to tribunal documents, the men utilized their victim’s wealth to marque dozens of existent property investments and acquisition luxury cars. As portion of the plea agreement, Potapenko and Turõgin agreed to forfeit assets valued implicit $400 million, which volition beryllium utilized to wage backmost investors.

Potapenko and Turõgin volition beryllium sentenced successful a Seattle tribunal connected May 8.

Cheyenne Ligon

On the quality squad astatine CoinDesk, Cheyenne focuses connected crypto regularisation and crime. Cheyenne is primitively from Houston, Texas. She studied governmental subject astatine Tulane University successful Louisiana. In December 2021, she graduated from CUNY's Craig Newmark Graduate School of Journalism, wherever she focused connected concern and economics reporting. She has nary important crypto holdings.