The Estonian government has approved the extradition of Ivan Turogin and Sergei Potapenko, co-founders of defunct bitcoin mining firm HashFlare, to the United States to face charges of cryptocurrency fraud, among other crimes.
According to local media reports, this is the second time the government of the northeastern European country has agreed to hand over the cryptocurrency merchant to the United States, following a court intervention on November 29 to cancel the initial approval.
HashFlare Duo accused of $575 million Ponzi scheme
Founded in 2015, HashFlare is a bitcoin mining company that allows customers to rent part of its mining operations, granting them ownership of all cryptocurrency generated by their respective portion of the company’s computing power.
Between 2015 and 2019, Potapenko and Turogin portrayed their cryptocurrency company as a legitimate business that attracted more than $550 million in purchases of “HashFlare mining contracts.” In fact, the company operated a website that allowed investors to view the number of tokens generated by the respective mining contracts.
However, according to the DOJ’s investigation, HashFlare is allegedly a Ponzi scheme with little mining operations as customers faced challenges in withdrawing mined tokens from the company. In fact, successful withdrawal efforts received assets different from the tokens registered in the mining contracts.
The U.S. Department of Justice announced that Potapenko and Turogin were suspected of committing a massive fraud and laundering funds generated from the sales of mining contracts by purchasing land and vehicles and storing some of the stash in crypto wallets and fiat bank accounts.
In addition to HashFlare, the two Estonian citizens are accused of marketing Polybius, a non-existent cryptocurrency bank that they used to defraud $25 million from unsuspecting investors.
Estonian defendant faces 18 charges in US
In November 2022, Estonian police and the US Federal Bureau of Investigation (FBI) arrested Sergei Potapenko and Ivan Turogin in a joint operation.
On September 7, the Estonian government approved a request to extradite the two suspects to the United States. However, the Tallinn Circuit Court blocked the order on the grounds that the government failed to investigate the suspects’ detention conditions in the United States. After meeting this condition, the Estonian government once again approved the transfer of the Hashflare duo to the United States.
Potapenko and Turogin have been charged with 18 counts of wire fraud, conspiracy to commit wire fraud and 16 counts of conspiracy to commit money laundering. If convicted, the Estonian businessmen could face lengthy prison sentences, as each offense carries a maximum sentence of 20 years in prison. #爱沙尼亚 #HashFlare