Two Estonian citizens in the United States have pleaded guilty to setting up a fraud cryptocurrency scheme worth over half a billion dollars, duping thousands of investors across the globe. According to US officials, the two accused scamsters had run a fake mining service HashFlare and collected fee from investors offering them a share of Bitcoin received for mining.
According to a Press Release by the U.S. Department of Justice Sergei Potapenko and Ivan Turõgin, both 40, sold contracts to their customers and assured them a share of the cryptocurrency mined by their purported mining service, HashFlare.
From the year 2015 to 2019, HashFlare’s sales were more than $577 million, but the crypto mining service lacked the computing capacity to deliver the amount of mining it had ensured to its customers. A web-based dashboard that was supposed to show mining profits displayed falsified data, which allowed the defendants to pump the funds for personal gain.
The forfeited assets will be used in a remission process to compensate the victims of the fraud. Each defendant will face a maximum penalty of $400 million and prison for 20 years, with further sentencing which is scheduled on 8th May of this year.
The U.S. Justice Department has also recommended the Estonian Police and Border Guard’s Cybercrime Bureau, the Estonian Prosecutor General, and the Ministry of Justice and Digital Affairs for their strong assistance with the investigation and extradition process.
The investigation was led by the FBI’s Seattle Field Office, with trial attorneys from the criminal division’s money laundering and asset recovery section, along with assistant U.S. Attorneys from the Western District of Washington, prosecuting the case.
Potapenko and Turõgin were extradited from Estonia to the U.S. last May, following their original arrest in November 2022, when Estonian authorities handed them over to U.S. law enforcement at Tallinn Airport.
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