The FBI is searching for the victims of a defunct bitcoin mining rig as two arrests have been made

  • Two Australians have been arrested for crypto fraud worth more than $575 million
  • The accused are the people behind the now-defunct Bitcoin cloud mining service provider – HashFlare
  • They allegedly used the money to purchase real estate and luxury cars

The US Department of Justice announced that two Estonian nationals were arrested in the capital, Tallinn. The management accused them of crypto fraud and money laundering. Scammers – Sergey Potapenko and Ivan Turgin – were the brains behind Bitcoin cloud mining service provider – HashFlare.

The Estonians are accused of defrauding investors of $575 million in crypto systems. The FBI has taken over the investigation into this case and is seeking possible victims of HashFlare. Additionally, if convicted of these crimes, the accused faces up to 20 years in prison.

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The defunct bitcoin mining service is allegedly taking in millions of dollars

The digital currency mining service provider was a subsidiary of HashCoins OU. The platform has provided cloud mining services for Bitcoin, Ethereum, Litecoin, DASH, and ZCash. It entered in August 2019, citing the cryptocurrency market and the unprofitability of bitcoin mining as the reason. Considering that the platform operates under a one-year contract, many people lost money because the company’s terms and conditions allowed it to terminate contracts without any refunds.

The latest information from the Department of Justice claims that Hashflare does not have the mining equipment it claims to have in the first place. The press release also stated,

When the investors asked to withdraw their profits from mining, Potapenko and Turõgin were unable to pay the mined coin as promised. Instead, they either resisted making payments or paid the investors in a virtual currency that the defendants had bought on the open market — not the currency they had mined.”

Notably, the defendants arose not only for their involvement with HashFlare but also Polybius, a platform that acts as a cryptocurrency bank. The defendants collected nearly $25 million from investors on the promise of paying them dividends to Polybius.

However, the earnings were not delivered. The money collected was transferred to other bank accounts and wallets controlled solely by the accused. Potapenko and Turõgin then allegedly laundered some of this money for shell companies to buy approximately 75 real estate and luxury cars.

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