Two Fraudsters Admit to $577 Million Cryptocurrency Scam

Two Estonian men have pleaded guilty to orchestrating a massive cryptocurrency Ponzi scheme that defrauded hundreds of thousands of people worldwide, including victims in the United States. The defendants, Sergei Potapenko and Ivan Turogin, agreed to forfeit over $400 million in assets obtained through the scheme.

Between 2015 and 2019, the pair operated HashFlare, a fraudulent cryptocurrency mining service that collected more than $577 million from customers who believed they were investing in real mining operations. However, the company lacked the computing power to generate the promised cryptocurrency, instead using falsified data to mislead investors. The proceeds were used to purchase luxury properties, vehicles, and investments.

Potapenko and Turogin, both 40 and from Estonia, each pleaded guilty to conspiracy to commit wire fraud and now face up to 20 years in prison. A federal judge will determine their sentences on May 8. The forfeited assets will be used in a remission process to compensate victims, with details to be announced later. The FBI’s Seattle Field Office led the investigation, with support from Estonian authorities and the U.S. Justice Department.