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Sergei Potapenko and Ivan Turogin, both Estonian nationals, agreed to forfeit all claims in digital assets frozen by US authorities as part of a plea deal with prosecutors.
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The co-founders of crypto mining service HashFlare agreed to plead guilty to one count of conspiracy to commit wire fraud as part of a deal with US authorities.
In Feb. 12 hearings in the US District Court for the Western District of Washington, Sergei Potapenko and Ivan Turogin pleaded guilty to one felony count out of the 18 charges they had been facing from US prosecutors. The Estonian nationals were responsible for running HashFlare, which defrauded users out of more than $550 million between 2015 and 2019, and raising $25 million from investors in 2017, claiming they would establish a digital bank called Polybius — the company was never created.
Speaking to Cointelegraph after the hearings, Reed Smith partner and defense counsel Mark Bini said both defendants had “agreed to forfeit their interests in assets that the Government froze in 2022” and to provide assistance “so that there will be zero financial harm to anyone.” According to the attorney, Potapenko, Turogin, and HashFlare returned $350 million in crypto payments to users between 2015 and 2022.
HashFlare shuttered its operations in 2019. Estonian authorities arrested Potapenko and Turogin in 2022 as part of the 18-count indictment, and after legal challenges, they were extradited to the US in May 2024. Both have been free on bail since July 2024 but could face up to 20 years in prison each after May 8 sentencing hearings.
This is a developing story, and further information will be added as it becomes available.
This article first appeared at Cointelegraph.com News
