US court begins trial of defendants in $575 million HashFlare cryptocurrency mining fraud

PANews reported on May 31 that according to Decrypt, Estonian citizens Sergei Potapenko and Ivan Turõgin appeared in court for the first time yesterday for alleged cryptocurrency fraud, according to a press release issued by the U.S. Department of Justice (DOJ). The Western District of Washington previously accused them of operating the fraudulent cryptocurrency mining service HashFlare from 2015 to 2019, deceiving hundreds of thousands of victims to invest more than $550 million, but the promised mining share was not fulfilled. In another plan in May 2017, Potapenko and Turõgin raised at least $25 million by investing in Polybius, which they claimed would set up a virtual currency bank. Although Polybius promised to share dividends from its profits, the bank was never established and most of the funds were allegedly transferred to accounts controlled by the defendants.

The Department of Justice further accused the two of laundering money through shell companies, fake contracts and invoices to purchase 75 properties, six luxury cars, cryptocurrency wallets and thousands of mining machines. They face charges of conspiracy to commit wire fraud, 16 counts of wire fraud and conspiracy to commit money laundering, each of which carries a maximum penalty of 20 years in prison.