Two Estonians who ran a crypto-Ponzi scheme worth $577 million pleaded guilty and the U.S. Attorney’s Office for Western District of Washington was able to forfeit $400 million as part of their plea.
Sergei Potapenko and Ivan Turõgin, both 40, pleaded guilty to conspiracy to commit wire fraud after selling fraudulent crypto mining contracts through their company HashFlare.
The defendants, however, lacked sufficient computing power to perform the crypto-mining they had promised. Instead, they falsified the data displayed on their website to give the impression of success.
According to the report, as part of the agreement, defendants were required to forfeit their assets including luxury cars, real estate and cryptocurrency accounts. The following is a statement by the spokesperson This Thursday.
"Between 2015 and 2019, HashFlare’s sales totaled more than $577 million, but HashFlare did not possess the requisite computing capacity to perform the vast majority of the mining," The U.S. Attorney’s Office said.
Potapenko and Turõgin now face up to 20 years in prison for conspiracy to commit wire fraud, with their sentencing scheduled for May 8.
Polybius is another scam that they admitted to having run. Initial Coin Offering A digital bank raised $31 Million in 2017 through an Initial Coin Offering (ICO).
In a statement, it is stated that the funds raised by Polybius have never been invested in a bank. Neither were any dividends paid out to investors. This further adds to the fraud nature of the scheme.
"Instead of using the proceeds to create a digital bank, Turõgin and Potapenko used a large portion of the proceeds for their own personal benefit," The FBI Seattle office You can also read about the importance of this in our article.
According to the U.S. Attorney’s Office, the defendants allegedly laundered fraud proceeds by using at least 75 properties and six luxury cars, as well as crypto wallets and thousands of crypto-mining machines.
Seattle Field Office of the FBI played an important role in this investigation. It worked with other international agencies, including the Estonian police and the Estonian government to apprehend the accused.
Two suspects are arrested in Tallinn (Estonia) on November 20, 2022 and extradited back to the U.S. for prosecution.
It also urges additional victims to come forward. It has established a dedicated Website Information on how to report potential crimes.
The US authorities have been working to punish crypto operators for fraud in a wide range of ways, including the guilty pleas and forfeitures.
In 2024, the U.S. Attorney’s Office of Western District of Washington took significant action. The following is a list of the most recent and relevant articles. Fines of record breaking $1.51 Billion.
Binance is the biggest contributor. Binance has been penalized with $4.3 Billion for breaking U.S. laws.
Sebastian Sinclair edited the book