The court proceedings against the Estonian founders of the cryptocurrency mining service HashFlare will commence on Thursday following their guilty plea to wire fraud conspiracy.
Charges and Admissions
Sergei Potapenko and Ivan Turogin were charged with falsifying investor earnings data and misleading customers who believed they were purchasing legitimate cloud mining contracts. Prosecutors allege that the scheme defrauded victims worldwide of hundreds of millions of dollars.
Defense Requests
In a court filing on September 5, U.S. prosecutors urged the judge to impose 10-year prison sentences for both men, rejecting their request for time served. Defense attorneys argued that HashFlare users had not suffered significant losses, citing the return of $400 million in cryptocurrency to customers.
HashFlare's History
HashFlare, once marketed as a major player in cloud-based bitcoin mining, shut down its operations in 2018, citing profitability issues. Prosecutors claim these explanations masked the fact that little to no mining was occurring.
The HashFlare case not only raises criminal concerns but also brings to light the influence of fraud on the cryptocurrency industry, intensifying discussions around consumer protection.
