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US arrests two men involved in Bitcoin cloud mining scheme

The US Department of Justice reported on Thursday (13) that Sergei Potapenko and Ivan Turõgin pleaded guilty to operating a pyramid scheme that posed as a Bitcoin cloud mining company called HashFlare.

According to authorities, the Estonian duo raised US$577 million (R$3.3 billion) by selling mining contracts. However, the company did not have the necessary machinery to serve all customers and the profit data presented on the website was false.

In other words, victims believed they were receiving profits from mining, but when paid, the money came directly from the pockets of new victims.

Scammers pledge to hand over $400 million in assets

While Bitcoin mining is a highly serious industry dominated by publicly listed companies, scammers have been running pyramid schemes posing as cloud miners for over a decade while taking advantage of their victims’ lack of knowledge.