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SEATTLE - Two Estonian nationals have pleaded guilty to a massive $577 million cryptocurrency scheme that reached as far as western Washington.
According to the Department of Justice, 40-year-olds Sergei Potapenko and Ivan Turõgin pleaded guilty to one count of conspiracy to commit wire fraud in the U.S. District Court in Seattle. As part of their plea agreements, both agreed to forfeit more than $400 million in assets seized during the investigation.
The backstory:
Court records show that Potapenko and Turõgin ran a fraudulent cryptocurrency mining service called HashFlare.
Between 2015 and 2019, the two sold contracts to customers to mine Bitcoin for a share of the profits. In reality, HashFlare did not have anywhere near the computing power required for the level of crypto they were promising to mine.
Prosecutors argued that HashFlare hosted a web-based dashboard which spoofed the data of all the crypto they purported to be mining, drawing more investors into the scheme.
Potapenko and Turõgin made $577 million in sales, which they used to buy real estate, luxury vehicles, and investments in other cryptocurrencies.
What's next:
Potapenko and Turõgin are scheduled to be sentenced on May 8 and face a maximum penalty of 20 years in prison.
The DOJ says a federal district court judge will consider additional penalties based on other statutory factors.
The FBI Seattle Division believes there may be more victims in this case. If you were a victim of the HashFlare cryptocurrency scheme, you are encouraged to submit a complaint to the FBI.
The Source: Information comes from the U.S. Attorney's Office in Seattle.
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