Two Estonian men, Sergei Potapenko and Ivan Turõgin, both 39, are on trial in Seattle for their alleged involvement in a massive cryptocurrency fraud scheme centered around HashFlare. The trial follows their arrest in Tallinn, Estonia, in November 2022, and is based on an 18-count indictment by the Western District of Washington. The indictment covers a period from 2015 to 2019, during which the defendants are said to have operated a fraudulent crypto mining service, according to Decrypt.

HashFlare lured hundreds of thousands of victims into purchasing mining contracts worth over $550 million. These contracts promised a share of virtual currency supposedly mined by HashFlare's extensive operations. However, the DOJ claims that HashFlare had minimal mining capacity, conducting less than 1% of the Bitcoin mining it advertised. When investors tried to withdraw their earnings, Potapenko and Turõgin allegedly refused payments or used Bitcoin bought on the open market instead of mined Bitcoin.

In addition to the mining fraud, the defendants are accused of a separate scheme in May 2017, where they raised at least $25 million through investments in Polybius, a company they claimed would become a virtual currency bank. Despite promising dividends from Polybius' profits, the bank was never established, and the funds were allegedly diverted to accounts controlled by the defendants.

The indictment also includes charges of money laundering. The DOJ alleges that the defendants laundered the fraud proceeds through shell companies, phony contracts, and invoices, using the funds to acquire 75 real estate properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines.

Potapenko and Turõgin face multiple charges, including conspiracy to commit wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering. Each charge carries a maximum penalty of 20 years in prison. The trial continues as the DOJ seeks justice for the victims of this extensive fraud.