Two founders and operators of HashFlare, which is a Bitcoin cloud-mining service, were arrested in Estonia. They are suspected of participating in a scheme to defraud crypto investors. According to the conspirators, the third party was responsible for the scheme.
The company now known as HashFlare (a cloud mining firm) was founded in 2015. According to the company website, customers may rent the company’s hashing power in order to mine Bitcoin and get a share of the company’s profits.
The company was widely recognized at the time as being one of the key players in the business. However, it stopped mining in July 2018, leading to speculation that it was planning to exit the market.
The entire mining operation, which was run by the company’s founders Sergei Potapenko and Ivan Turõgin, was, however, part of a “multi-faceted scheme” that “defrauded hundreds of thousands of victims,” as stated in a statement issued by the United States Department of Justice and citing court documents. According to this statement the mining operation was part a multi-faceted scheme that “defrauded hundreds and thousands of victims.”
They are also believed to have conspired to conceal their “criminal proceeds.” via the use 75 residences and six luxury cars, cryptocurrency wallets, and hundreds upon hundreds of pieces cryptocurrency mining equipment. They were both accused of this.
He was quoted as saying, “These defendants capitalized both on the allure and mystery surrounding cryptocurrency mining to commit an immense Ponzi scheme.”
They were charged with conspiracy, wire fraud and 16 counts. One count is conspiracy to launder money using shell businesses or bogus invoices. These charges are against HashFlare founders. If proven guilty, HashFlare’s founders could be sentenced to up to twenty years imprisonment.
HashCoins OU is HashFlare’s parent company. HashFlare’s mining services were first made available in 2015. Potapenko and Turõgin are responsible for the establishment of both of these businesses.
HashFlare announced it would stop providing Bitcoin mining services from July 2018, citing difficulties in turning profits due to the volatility of the market.
The FBI is currently investigating customers who signed up to what the FBI considers fraudulent operations by HashFlare and HashCoins OU. Customers are being contacted for more information to help them.