According to Foresight News, Estonian citizens Sergei Potapenko and Ivan Turõgin made their first court appearance yesterday, as reported by the U.S. Department of Justice (DOJ). They are accused of operating a fraudulent cryptocurrency mining service, HashFlare, from 2015 to 2019. The DOJ alleges that they deceived hundreds of thousands of victims into investing over $550 million, with the promised mining shares never materialized.
In another scheme in May 2017, Potapenko and Turõgin raised at least $25 million by investing in Polybius company. They claimed that the company would establish a virtual currency bank. Despite Polybius's promise to distribute dividends from its profits, the bank was never established, and most of the funds were allegedly transferred to accounts controlled by the defendants.
The DOJ further alleges that the two laundered money through shell companies, fake contracts, and invoices used 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 launder money, with each charge carrying a maximum penalty of 20 years in prison.