Sergey Potapenko and Ivan Turogin, the two founders of the cryptocurrency mining platform HashFlare, have pleaded guilty to a fraud that made them hundreds of millions of dollars. They sold fictitious cryptocurrency mining contracts and defrauded hundreds of investors around the world.
HashFlare was positioned as a cloud mining service for cryptocurrencies, including Bitcoin, Ether, DASH and ZCASH. Users could purchase contracts to participate in virtual profits from mining digital coins. In reality, the fraudsters did not have the necessary mining equipment and simply embezzled investors’ funds: from 2015 to 2019, Potapenko and Turogin raised $577 million, of which $25 million was transferred to their personal accounts. They bought real estate, luxury cars and cryptocurrency mining equipment, creating the illusion of a legitimate business. When investors began to demand money, the scammers bought bitcoins as additional income and transferred them to their victims under the guise of payments from their own mining business. However, this scheme was later exposed by the authorities.
Potapenko and Turogin plead guilty and agree to pay $400 million in compensation to their victims. Their case proves once again that the crypto market remains an attractive area for scammers and that investors should carefully check companies before investing. #### SEO Text The HashFlare cryptocurrency scam ended with a high-profile arrest: Potapenko and Turogin defrauded hundreds of investors by selling fictitious contracts for mining bitcoins and ether. They received $577 million, spent the money on real estate and supercars, and now face 20 years in prison.
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