The Estonian government approves the extradition request of the HashFlare boss

The Estonian government has approved the extradition of Ivan Turogin and Sergei Potapenko, co-founders of defunct Bitcoin mining company HashFlare, to the United States to face charges of criminal activity such as Crypto Assets fraud.

According to local media reports, this is the second time that the northeastern European country’s government has agreed to hand over Crypto Assets merchants to the United States, following a court intervention on November 29 to cancel initial approvals.

HashFlare Duo accused of involvement in $575 million Ponzi Scheme

Founded in 2015, HashFlare is an BitcoinMining company that allows customers to rent a portion of their Mining business, thereby granting ownership of all the Crypto Assets generated by their respective parts of the Computing Power.

Between 2015 and 2019, Potapenko and Turogin described their Crypto Assets companies as legitimate businesses, attracting more than $550 million in “HashFlare Mining Contract” purchases. In fact, the company operates a website that allows investors to see the number of Token generated by their respective Mining contracts.

However, according to the U.S. Department of Justice investigation, HashFlare is allegedly a Ponzi Scheme with little to no mining operations as customers face challenges in withdrawing mined tokens from the company. In fact, successful withdrawal efforts result in different assets than Tokens registered in the Mining contract.

The U.S. Department of Justice announced that Potapenko and Turogin were suspected of committing large-scale fraud and Money Laundering funds generated from the sale of mining contracts by buying land and vehicles and depositing some holdings in crypto Wallets and fiat bank accounts.

In addition to HashFlare, the two Estonian citizens are accused of marketing Polybius, a non-existent Crypto Assets bank that they used to defraud $25 million from unsuspecting investors.

Estonian defendant faces 18 charges in the US

In November 2022, Estonian police and the Federal Bureau of Investigation (FBI) conducted a joint operation to arrest Sergei Potapenko and Ivan Turogin.

On 7 September, the Estonian government granted a request to extradite the two suspects to the United States. However, the Tallinn Circuit Court blocked the order on the grounds that the government had failed to investigate the suspect’s detention conditions in the United States. After this condition was met, the Estonian government again approved the transfer of the Hashflare duo to the United States.

Potapenko and Turogin are charged with 16 counts of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit Money Laundering. If convicted, these Estonian businessmen could be sentenced to long prison terms, as each crime carries a maximum sentence of 20 years in prison.