By Michael Scott
Sergei Potapenko and Ivan Turogin face 18 charges in the U.S. and lengthy jail terms for supposedly making HashFlare a Ponzi scheme. Sergei Potapenko and Invan Turogin, the co-founders of HashFlare, an inactive Bitcoin cloud miner, are scheduled for deportation from Estonia to the U.S.
In November, an appeals court stopped the repatriation of the two Estonian natives. However, the Estonian government has now met the necessary conditions for the plan to continue.
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Sergei and Ivan have been charged with 18 counts of wire fraud as well as a scheme to execute money laundering in the U.S. Besides, the two face up to 20 years behind bars.
Despite their firm being a leading cloud miner, it was supposedly run as a Ponzi scheme. In November 2022, Sergei and Ivan were apprehended in Estonia following a significant probe that involved the Estonian and United States governments.
In September, the Estonian government sanctioned Sergei’s and Ivan’s deportation. However, in November, they triumphantly petitioned the verdict. According to the court, the lower court that sanctioned their deportation did not consider the state of detention facilities in the United States.
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As such, the two were granted monetary compensation. Currently, the Estonian government has gathered proof of the conditions of United States detention.
According to a local news publication, this could ‘ensure that the violation of the people’s important rights because of deportation is not unequal.’Before its fall in 2019, HashFlare received $575M.
It had been dealing with issues since 2018, when a lack of revenue compelled it to shut down some miners. According to the United States Department of Justice (DOJ), Sergei and Ivan ‘gave contracts under which clients were required to pay a fee to rent a share of HashFlare’s mining activities.
In exchange, they would get virtual currency generated by their percentage of the operation.’ Nevertheless, the cloud mining service lacked the equipment or the 1% of the computing power it asserted.
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Further, the DOJ also claimed that when investors were requested to withdraw their mining earnings, the offenders refused to make the payments or used virtual currency purchased on the open market to pay off the investors.
The Department of Justice said that many people were victims of this scam. The United States Federal Bureau of Investigation is still searching for more.
Sergei and Invan are also accused of amassing $25M from investors to create a digital bank called Polybius. The two did not complete their mission.