Estonian government approves US extradition of HashFlare founder, overturns court block
Posted: January 26, 2024 10:42 AM Updated: January 26, 2024 10:42 AM
Correction and fact check date: January 26, 2024, 10:42 AM
briefly
Estonia has approved the extradition of the former founder of HashFlare, who allegedly ran a Ponzi scheme and embezzled $575 million.
The Estonian government has approved the extradition to the United States of two Estonian cryptocurrency entrepreneurs and the founder of defunct cloud cryptocurrency mining service HashFlare. HashFlare reportedly operated as a Ponzi scheme, misappropriating $575 million.
After a thorough review, the Estonian Ministry of Justice concluded that there was adequate evidence to ensure that extradition proceedings would not disproportionately violate the fundamental rights of individuals. Nonetheless, the exact timeline for extraditing former HashFlare founders Sergei Potapenko and Ivan Turõgin to the United States to settle fraud charges remains unclear.
This decision is a response to the intervention of the Tallinn Circuit Court in November 2023, which voiced criticism of the Estonian government. The court argued that there was a lack of comprehensive investigation into important aspects of the decision to extradite the founders. U.S. authorities accused the pair of laundering $575 million in client funds to buy real estate and luxury cars.
Sergei Potapenko and Ivan Turõgin were arrested in Estonia in November 2022 after the U.S. Department of Justice (DoJ) submitted a written extradition request. According to the indictment, the two are accused of misleading victims into obtaining deceptive equipment rental contracts through the cryptocurrency mining service HashFlare and leading them to invest in a cryptocurrency bank called Polybius Bank.
Prosecutors allege that both HashFlare and Polybius Bank engaged in a Ponzi scheme. According to the DoJ, Sergei Potapenko and Ivan Turõgin reportedly used shell companies in the process of laundering customer funds.
HashFlare, once a cryptocurrency mining giant, faces fraud charges
Founded in 2015, HashFlare provided cloud mining services for Bitcoin, Litecoin, Ethereum, Zcash, and Dash. The platform includes a dashboard that allows users to track their mining activity and allocate hash power to various mining pools. Maintenance fees were charged for mining services.
The company was considered a prominent player in the industry at the time. However, in 2018, many users reported experiencing problems or delays with their cryptocurrency withdrawals. Following these issues, HashFlare announced the termination of its Bitcoin mining service, citing the lack of profitability of Bitcoin mining as the main reason.
Customer was not reimbursed for the remainder of the prepaid annual payment contract. However, other cryptocurrencies in the platform’s portfolio continued to operate without interruption.
According to the indictment, the two alleged that HashFlare operated as a “large-scale cryptocurrency mining operation.” However, the claim states that the company was mining at a much lower rate than the claimed figure, i.e. less than 1%. Moreover, the funds withdrawn are believed to have been financed by purchasing Bitcoin from third parties rather than profits from mining operations.
The approval of extradition for Sergei Potapenko and Ivan Turõgin, along with ongoing legal proceedings, shed light on allegations of misconduct by HashFlare’s founders and reveal a complex web of fraudulent conspiracy involving Ponzi fraud, financial improprieties and their misleading representations. Cryptocurrency mining operations.
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About the author
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through her work with VCs, notable cryptocurrency projects, and science writing. You can contact us at (email protected).
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alice davidson
Alisa is a reporter for Metaverse Post. She focuses on everything related to investing, AI, metaverse, and Web3. Alisa holds a degree in Art Business and her expertise lies in the fields of art and technology. She developed a passion for journalism through her work with VCs, notable cryptocurrency projects, and science writing. You can contact us at (email protected).
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