The Government of Estonia has approved the extradition of Ivan Turogin and Sergei Potapenko, co-founders of the defunct Bitcoin mining company HashFlare, to the United States to face charges of cryptocurrency fraud, among other criminal activities.
According to a report by local media postimees, this represents the second time the government of the Northeastern European nation will consent to handing over the crypto businessmen to the US following a court intervention on November 29 which annulled the initial approval.
HashFlare Duo Accused Of $575 Million Ponzi Scheme
Launched in 2015, HashFlare operated as a Bitcoin mining company that allowed customers to rent a part of its mining operation, granting them ownership of all cryptocurrency generated by their respective portions of the company’s hash power.
Between 2015 to 2019, Potapenko and Turogin presented their crypto firm as a legitimate business attracting over $550 million in purchases of “HashFlare mining contracts”. In fact, the company operated a website thatallowed investors to view the number of tokens that have been supposedly generated by their respective mining contracts.
However, according to investigations by the US Department of Justice, HashFlare allegedly was a Ponzi scheme with little to no mining operation as customers faced challenges in withdrawing their mined tokens from the company. In fact, successful withdrawal efforts were rewarded with assets different from the tokens registered in the mining contracts.
The US DOJ declares that Potapenko and Turogin allegedly executed a large-scale fraud and proceeded to launder the funds generated from the mining contract sales through the acquisition of lands and vehicles as well as keeping some stash in crypto wallets and fiat bank accounts.
In addition to HashFlare, both Estonian citizens were also accused of marketing Polybius, a non-existent crypto bank that they used to fleece $25 million from unsuspecting investors.
Estonian Defendants Face 18 Charges In The US
Sergei Potapenko and Ivan Turogin were arrested in November 2022 in a joint operation by the Estonian police and the US Federal Bureau of Investigation (FBI).
On September 7, the Estonian Government cleared an extradition request of both suspects to the US. However, the Tallinn Circuit Court blocked the order, citing the government’s failure to inquire into the detention conditions of the suspects in the US. Having satisfied this condition, the Estonian government has once again issued approval to transfer the Hashflare duo to the US.
Potapenko and Turogin stand accused of 18 -charges of 16 counts of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. If found guilty, the Estonian businessmen could be set for a long time behind bars as each of these crimes warrants up to a 20-year sentence.
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