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Estonian law enforcement agencies have detained two founders of a closed cloud service for mining cryptocurrencies HashFlare. They are suspected of participating in a $575 million fraud scheme.
The HashFlare service was created in 2015 and allowed users to rent cloud facilities for mining cryptocurrencies. At one time, the company could be called one of the leaders in its field, but in 2018 the service ceased to exist. According to the US Department of Justice, the entire company was just a "multi-faceted fraudulent scheme" in which "hundreds of thousands of people"lost their funds.
The court document claims that HashFlare employees under the leadership of Sergey Potapenko and Ivan Turygin attracted customers and persuaded them to enter into cloud capacity rental agreements, but this was only fraud. Also, the victims funds were attracted to a fake bank to work with cryptocurrencies Polybius Bank.
The defendants used the proceeds of crime to buy 75 properties and 6 luxury cars. They also found cryptocurrency wallets and thousands of devices for mining digital assets.
"The defendants took advantage of the attractiveness of cryptocurrencies for investors and the high level of opacity in cloud mining. The scale of this pyramid scheme was truly amazing," said Prosecutor for the Western District of Washington Nick Brown.
Law enforcement agencies have charged the Estonians with conspiracy to commit fraud using electronic means, 16 counts of fraud and 1 count of money laundering using front companies and forged documents. If extradited to the United States, they can face up to 20 years in prison.
The HashFlare service was created in 2015 and allowed users to rent cloud facilities for mining cryptocurrencies. At one time, the company could be called one of the leaders in its field, but in 2018 the service ceased to exist. According to the US Department of Justice, the entire company was just a "multi-faceted fraudulent scheme" in which "hundreds of thousands of people"lost their funds.
The court document claims that HashFlare employees under the leadership of Sergey Potapenko and Ivan Turygin attracted customers and persuaded them to enter into cloud capacity rental agreements, but this was only fraud. Also, the victims funds were attracted to a fake bank to work with cryptocurrencies Polybius Bank.
The defendants used the proceeds of crime to buy 75 properties and 6 luxury cars. They also found cryptocurrency wallets and thousands of devices for mining digital assets.
"The defendants took advantage of the attractiveness of cryptocurrencies for investors and the high level of opacity in cloud mining. The scale of this pyramid scheme was truly amazing," said Prosecutor for the Western District of Washington Nick Brown.
Law enforcement agencies have charged the Estonians with conspiracy to commit fraud using electronic means, 16 counts of fraud and 1 count of money laundering using front companies and forged documents. If extradited to the United States, they can face up to 20 years in prison.