HashFlare Co-Founders Face U.S. Extradition Over Cloud Mining Scam
Summary:
Estonian nationals and HashFlare co-founders, Ivan Turogin and Sergei Potapenko, who previously ran a successful Bitcoin cloud miner, are facing extradition to the U.S. The pair, who are charged with conspiracy, wire fraud, and money laundering, were arrested following a large-scale investigation. The superior court in Estonia has recently provided evidence suggesting extraditing them to the U.S. would not disproportionately infringe on their fundamental rights. The men are said to have scammed hundreds of thousands of victims through HashFlare, which folded in 2019 after having amassed $575 million. They were also accused of collecting $25 million from investors for a digital bank project that never materialized.
Estonian nationals and HashFlare co-founders, Ivan Turogin and Sergei Potapenko, who ran an erstwhile thriving Bitcoin cloud miner, are once again facing extradition to the U.S. from Estonia. An Estonian appellate court had earlier put a stop to their extradition in November, but conditions demanded by the Estonian government for resuming the legal process have been met. U.S. authorities charged the duo with conspiracy, wire fraud, and conspiracy to commit money laundering, a total of 18 counts, and if found guilty, could be jailed for up to 20 years. The pair were apprehended in Estonia in November 2022 following a wide-scale investigation spearheaded by U.S. and Estonian agencies. Although their extradition had been greenlighted by the Estonian government in September, they successfully appealed the decision in November. The argument was that the inferior court that sanctioned their extradition hadn't adequately evaluated the state of U.S. detention facilities. Instead, the superior court ruled for Turogin and Potapenko to be monetarily compensated.
The Estonian government has since further investigated the conditions of U.S. detention facilities, gathering evidence suggesting that extraditing the pair would not excessively infringe on their basic rights, as reported by the local news outlet Postimees.
Before its untimely closure in 2019, HashFlare successfully garnered an impressive $575 million. The firm had started facing troubles a year prior, shutting down some of its mining operations citing revenue insufficiencies.
According to the U.S. Department of Justice, Turogin and Potapenko gave customers the opportunity to rent a percentage of HashFlare’s mining operations by striking contracts, promising virtual currency as a return. However, not only did HashFlare not possess the infrastructure it declared, it also had a minuscule fraction of the computational power it claimed. The department added that when investors demanded their mining profits, the accused either hedged or compensated them via open market-purchased virtual currency, instead of mined currency. The alleged scam purportedly affected hundreds of thousands of victims, and the U.S. Federal Bureau of Investigation is in ongoing efforts to identify further victims.
Additionally, Turogin and Potapenko have also been accused of amassing $25 million from investors to create a digital bank named Polybius, a project that never came to fruition.
Published At
1/27/2024 12:35:00 AM
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