Two Estonian men, Sergei Potapenko and Ivan Turõgin, have pleaded guilty to running a large-scale cryptocurrency fraud scheme that took in over $577 million.
The US Attorney’s Office for the Western District of Washington announced on February 13 that authorities had secured $400 million in seized assets as part of their plea agreement.
The two operated HashFlare, a company that sold cryptocurrency mining contracts to customers. However, instead of mining, they manipulated data to make it seem like mining was occurring. In reality, the company lacked the computing power needed to deliver the services it claimed.
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The defendants have agreed to forfeit various assets, including real estate, luxury vehicles, and cryptocurrency accounts, which were obtained through their fraudulent activities.
Potapenko and Turõgin also admitted to running a separate scam in 2017 under the name Polybius. This project, marketed as an Initial Coin Offering (ICO) for a digital bank, raised around $31 million.
The FBI Seattle office said in a November 2022 statement, “Instead of using the proceeds to create a digital bank, Turõgin and Potapenko used a large portion of the proceeds for their own personal benefit”.
Potapenko and Turõgin are awaiting sentencing on May 8 and could face up to 20 years in prison for conspiracy to commit wire fraud.
Meanwhile, an Indian darknet user was recently sentenced to over 10 years in a US prison. What happened? Read the full story.
Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
