United States vs. Sergei Potapenko and Ivan Turogin

United States vs. Sergei Potapenko and Ivan Turogin

Case Number:  22-cr-00185-RSL

Case Summary: 

The defendants, Sergei Potapenko and Ivan Turogin, are alleged to have induced hundreds of thousands of victims to purchase contracts in a cryptocurrency mining service called HashFlare. Victims paid more than $575 million to the defendants’ companies. The defendants then used shell companies to launder the fraud proceeds and to purchase real estate and luxury cars.

According to the indictment, Potapenko and Turõgin claimed that their business, HashFlare, operated a massive cryptocurrency mining operation. In fact, according to the indictment, HashFlare’s equipment performed Bitcoin mining at a rate of less than one percent of the computing power it purported to have. When investors asked to withdraw their mining proceeds, the defendants were not able to pay with the mined currency as promised. Instead, the defendants either resisted making the payments, or paid off the investors using virtual currency the defendants had purchased on the open market—not currency they had mined. HashFlare closed its operations in 2019.

In May 2017, Potapenko and Turõgin offered investments in a company called Polybius, which they said would form a bank specializing in virtual currency. The defendants promised to pay investors dividends from Polybius’ profits. The men raised at least $25 million in this scheme and transferred most of the money to other bank accounts and virtual currency wallets they controlled. Polybius never formed a bank or paid any dividends.

The indictment also charges the defendants with conspiring to launder their criminal proceeds by using shell companies and phony contracts and invoices. The indictment alleges that the money laundering conspiracy involved at least 75 real properties, six luxury vehicles, cryptocurrency wallets, and thousands of cryptocurrency mining machines.

Defendant:  Sergei Potapenko

Court Dates: 

Initial Appearance and Arraignment:  June 10, 2024 @ 1:00 p.m. Courtroom 12B

Detention Hearing:  June 14, 2024 @ 1:00 p.m., courtroom 12B

Trial:  August 5, 2024, Courtroom 15106

Trial Continued:  March 17, 2025, Courtroom 15106

Defendant:  Ivan Turogin

Court Dates: 

Initial Appearance and Arraignment:  June 10, 2024 @ 1:30 p.m. Courtroom 12B

Detention Hearing:  June 14, 2024 @ 1:30 p.m., courtroom 12B

Trial:  August 5, 2024, Courtroom 15106

Trial Continued:  March 17, 2025, Courtroom 15106

Court Documents:

Indictment:

Other Documents:

Press Releases:

Two Estonian citizens arrested in $575 million cryptocurrency fraud and money laundering scheme

Two Estonian defendants indicted in massive cryptocurrency Ponzi scheme extradited to U.S.