Tessa M. Gorman, U.S. Attorney | U.S. Attorney for the Western District of Washington
Two Estonian nationals have admitted guilt in a substantial cryptocurrency Ponzi scheme, impacting numerous individuals globally, including those in the United States. Sergei Potapenko and Ivan Turõgin confessed to orchestrating a fraud that accumulated $577 million through their company HashFlare. The duo has agreed to surrender assets worth over $400 million as part of their plea deal.
Court documents reveal that Potapenko and Turõgin sold contracts promising customers shares of cryptocurrency mined by HashFlare. However, between 2015 and 2019, HashFlare lacked the necessary computing power to fulfill these promises. Instead, customers were shown falsified data on profits through a web-based dashboard. Proceeds from this fraudulent activity were used by the defendants to acquire real estate, luxury vehicles, and maintain various investment accounts.
Both defendants have pleaded guilty to conspiracy to commit wire fraud and are set for sentencing on May 8. They each face up to 20 years in prison. Sentences will be determined by a federal district court judge based on U.S. Sentencing Guidelines and other legal factors.
The Justice Department acknowledged support from the Cybercrime Bureau of the Estonian Police and Border Guard during the investigation. Additionally, assistance was provided by Estonia's Prosecutor General, Ministry of Justice and Digital Affairs for extradition processes. The Office of International Affairs within the Justice Department also contributed significantly.
The announcement was made by Supervisory Official Antoinette T. Bacon from the Justice Department’s Criminal Division, Acting U.S. Attorney Teal Luthy Miller for the Western District of Washington, Assistant Director Chad Yarbrough of the FBI’s Criminal Investigative Division, and Special Agent in Charge W. Mike Herrington from the FBI Seattle Field Office.
The case was investigated by the FBI Seattle Field Office with prosecution led by Assistant U.S. Attorneys Andrew Friedman and Sok Jiang for the Western District of Washington along with Trial Attorneys Adrienne E. Rosen and David Ginensky from the Criminal Division’s Money Laundering and Asset Recovery Section. Assistant U.S. Attorney Jehiel Baer is managing asset forfeiture aspects.
Individuals who suspect they may be victims can visit www.fbi.gov/hashflare for more information.
