Two Estonian nationals pleaded guilty last week for their operation of a massive, multi-faceted cryptocurrency Ponzi scheme that victimized hundreds of thousands of people from across the world, including in the United States, officials stated.
As part of their guilty pleas, the defendants agreed to forfeit assets valued over $400 million obtained during the conspiracy.
According to court documents, Sergei Potapenko and Ivan Turõgin, both 40, sold contracts promising customers a share of cryptocurrency mined through their company, HashFlare.
However, from 2015 to 2019, HashFlare generated over $577 million in sales without having the computing power to perform most of the mining it claimed. The company’s online dashboard, which appeared to show customers their mining profits, instead displayed falsified data.
Potapenko and Turõgin used the fraudulent proceeds to buy real estate, luxury vehicles, and invest in cryptocurrency. They have agreed to forfeit assets worth over $400 million, which will be used to compensate victims through a remission process. Details on the process will be announced later.
Potapenko and Turõgin each pleaded guilty to conspiracy to commit wire fraud. They face up to 20 years in prison and are set for sentencing on May 8..
The FBI Seattle Field Office investigated the case.
Trial Attorneys Adrienne E. Rosen and David Ginensky of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorneys Andrew Friedman and Sok Jiang for the Western District of Washington are prosecuting the case.
Assistant U.S. Attorney Jehiel Baer for the Western District of Washington is handling asset forfeiture aspects of the case.