Estonia Approves Extradition of HashFlare Bosses – Reveals More Information

In a significant development, the Estonian government has given the green light for the extradition of Ivan Turogin and Sergei Potapenko, the co-founders of the now-defunct Bitcoin mining enterprise HashFlare, to the United States. The extradition request pertains to various charges, including cryptocurrency fraud, leveled against them.

Local media outlet Postimees reported that this decision marks the second instance where Estonia has consented to extraditing these crypto entrepreneurs to the US, following a court intervention on November 29 that nullified the initial approval.

HashFlare, which commenced operations in 2015, functioned as a Bitcoin mining company offering customers the opportunity to lease a share of its mining infrastructure, thereby entitling them to the cryptocurrency generated by their allocated hash power.

Between 2015 and 2019, Potapenko and Turogin portrayed their crypto venture as a legitimate enterprise, attracting over $550 million in investments through “HashFlare mining contracts.” They maintained a website that purported to display the tokens generated by clients’ mining contracts.

However, investigations conducted by the US Department of Justice revealed allegations that HashFlare was operating as a Ponzi scheme, with minimal actual mining activities. Customers encountered difficulties withdrawing their mined tokens, and successful withdrawals often resulted in assets differing from those specified in the mining contracts. The US DOJ asserts that Potapenko and Turogin orchestrated a large-scale fraud, subsequently laundering the proceeds from mining contract sales through property acquisitions, vehicle purchases, and holdings in crypto wallets and bank accounts.

In addition to HashFlare, the Estonian duo were implicated in promoting Polybius, a fictitious crypto bank, through which they purportedly defrauded $25 million from unsuspecting investors.

Sergei Potapenko and Ivan Turogin were apprehended in November 2022 in a joint operation involving the Estonian police and the US Federal Bureau of Investigation (FBI).

On September 7, the Estonian Government initially approved the extradition request, which was subsequently challenged by the Tallinn Circuit Court due to concerns about the detention conditions awaiting the suspects in the US. Having addressed these concerns, the Estonian government has reissued its approval for the extradition of the HashFlare executives to the US.

Potapenko and Turogin face a total of 18 charges, including counts of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. If convicted, the Estonian businessmen could potentially face lengthy prison sentences, with each offense carrying a maximum penalty of 20 years.