HashFlare Co-Founders Plead Guilty, In Scam of Over $550M

Two co-founders of the crypto mining service HashFlare, Sergei Potapenko and Ivan Turogin, have agreed to plead guilty to conspiracy to commit wire fraud in connection with a massive fraud that scammed users of over $550 million. The duo entered their guilty plea on February 12 in the US District Court in Washington. They were facing 18 charges from US prosecutors, and as part of a plea deal, they admitted to one felony count.

HashFlare Co-founders Plead Guilty

Potapenko and Turogin, both Estonian nationals, operated HashFlare, a platform that misled users about the profitability and capabilities of its mining operations between 2015 and 2019. In addition to defrauding users, the two also raised $25 million from investors in 2017, promising to create a digital bank called Polybius, which ultimately never came to form.

Mark Bini, the defense attorney for the co-founders, confirmed that both defendants have agreed to forfeit assets frozen by the US government in 2022. They will also assist in ensuring that there is no further financial harm to the victims. Potapenko and Turogin, along with HashFlare, returned $350 million in cryptocurrency payments to users between 2015 and 2022.

HashFlare closed down its operations in 2019, but Potapenko and Turogin were arrested by Estonian authorities in 2022 under the 18-count indictment. Both Potapenko and Turogin were extradited to the US in May 2024. Although both co-founders have been released on bail since July 2024, they face the possibility of up to 20 years in prison when they are sentenced on May 8, 2025.

The indictment had claimed that HashFlare misrepresented its mining operations, claiming much higher output than was actually occurring. According to the initial charges, the platform’s mining capabilities were only operating at about 1% of what the founders had led customers to believe. Turogin’s lawyer, Andrey Spektor, argued that no customer was financially harmed by the scam and that while HashFlare did mine cryptocurrency, it did so at far lower rates than it had promised.

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