Key takeaways:
- The co-founders of HashFlare, Ivan Turogin and Sergei Potapenko, are once again scheduled to be extradited from Estonia to the United States.
- Following a thorough investigation by US and Estonian law enforcement, Turogin and Potapenko were taken into custody in Estonia in November 2022.
The co-founders of the defunct Bitcoin cloud miner HashFlare, Ivan Turogin and Sergei Potapenko, are once again scheduled to be extradited from Estonia to the United States.
An appeals court blocked the extradition of the Estonian citizens in November, but the Estonian government has already fulfilled the requirements for it to proceed.
Turogin and Potapenko could spend a maximum of 20 years in jail each after being charged with 18 charges of conspiracy, wire fraud, and conspiracy to commit money laundering in the United States. Their business was purportedly operated like a Ponzi scheme however, it was once a top cloud miner.
Following a thorough investigation by US and Estonian law enforcement, Turogin and Potapenko were taken into custody in Estonia in November 2022. Turogin and Potapenko’s extradition was authorized by the Estonian government in September.
However, they successfully appealed the decision in November, and a court determined that the lower court’s decision to authorize their extradition did not take into account the conditions in U.S. detention facilities. Instead, Turogin and Potapenko were ordered by the higher court to receive monetary compensation.
According to a report from local news outlet Postimees, the Estonian government has gathered information on the terms of the detainees’ stay in the United States, suggesting that it may make sure that the person’s fundamental rights are not being disproportionately violated as a result of their extradition.
Prior to its collapse in 2019, HashFlare made $575 million. Ever since it closed down some of its miners last year on the grounds of not receiving enough money from them, it had been having issues.
As per the allegations made by the US Department of Justice (DOJ), Turogin and Potpenko provided agreements wherein clients may lease a portion of HashFlare’s mining activities for a charge, receiving the virtual money generated by their segment of the business.
Nevertheless, HashFlare lacked the hardware and 1% of the processing capacity it claimed to possess. The Department of Justice went on:
“When investors asked to withdraw their mining proceeds […] the defendants either resisted making the payments, or paid off the investors using virtual currency the defendants had purchased on the open market — not currency they had mined.”
Hundreds of thousands of people are victims of this scam, according to the DOJ. The victims are still being sought after by the US Federal Bureau of Investigation.
Additionally, Turogin and Potapenko are charged with obtaining $25 million from investors in order to launch Polybius, a digital bank. They did not carry out their intended actions.
