Two Founders of HashFlare, a Closed Bitcoin Cloud Mining, Arrested in Estonia For alleged involvement in a $575 million crypto fraud conspiracy.
HashFlare is a Bitcoin cloud mining company that was founded in 2015 with the aim of allowing customers to rent the company’s mining power to mine. cryptocurrencies and receive equal profit sharing
The company was seen as one of the leading companies in the business at the time. The mining operation was shut down in July 2018.
However, according toStatement by the United States Department of Justice referring to court documents. It stated that the entire mining operation, run by its founders Sergei Potapenko and Ivan Turõgin, was part of a “scheme that “scammed hundreds of thousands of victims”.
This includes convincing the victim to do so. They also conducted “equipment leases” through HashFlare and persuaded other victims to invest in a fake currency bank called Polybius Bank.
The pair are also accused of conspiring to launder “earnings” through 75 assets, including six luxury cars, digital wallets and thousands of mining machines.
“These defendants took advantage of both the allure of cryptocurrencies and the difficulty of cryptocurrency mining. to carry out a massive Ponzi scheme,” said U.S. Attorney for the Western District of Washington Nick Brown, who faces up to 20 years in prison.
HashCoins OU, the parent company of HashFlares, was founded by Potapenko and Turõgin in 2013, while HashFlare launched a mining service in 2015, initially offering contracts for SHA-256 (Bitcoin) and scrypt, ETHASH, DASH, and ZCASH.
By July 2018, HashFlare announced the cessation of BTC mining, citing difficulty in generating revenue amid market volatility.
Customers are not refunded for the remainder of the annual contract fee which was pre-paid, with other crypto assets available in the platform’s portfolio continuing to operate as normal.
The last public communication from HashFlare happened in 2019 viapostIt was on Aug. 9 where they announced that they were suspending the sale of ETH contracts due to “current capacity being sold out.”
The company promises to return in “near future”, but then went silent
The FBI is currentlyinvestigateThe lawsuit is seeking information from alleged customers of HashFlare, HashCoins OU and Polybius.
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