The Estonian government has approved the extradition of Ivan Turogin and Sergei Potapenko, founders of the Bitcoin cloud miner to the United States. The duo was charged with fraud for allegedly running a $575 million Ponzi scheme.
Notably, the development comes nearly two months after the Tallinn Circuit Court disapproved of the duo’s extradition to the US.
What Happened?
Arrested in November 2022 in Tallinn, the crypto businessmen operated HashFlare from 2015 to 2019. The mining company claimed to lease hashing power for crypto mining, and it also encouraged investment in a fake bank. However, it turned out to be a Ponzi scheme leading to investors losing a total of $575 million.
According to the US Attorney’s Office in the Western District of Washington, the duo lied about the virtual currency mining equipment they claimed they had.
“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”, the office added.
Additionally, HashFlare founders allegedly used shell companies to launder $575 million of clients’ money which they used to fund their lifestyle, purchasing real estate and luxury cars.
The Duo’s Extradition
Last year, the Tallinn Circuit Court disapproved a written request from the U.S. Department of Justice for the extradition of Estonian citizens Ivan Turogin and Sergei Potapenko to the United States. The court argued that the government had failed to investigate and consider important circumstances like the conditions of detention in the U.S., claiming that it could infringe on the human rights of the duo.
Fast forward to today, Estonia’s Ministry of Justice has approved the extradition of Ivan Turogin and Sergei Potapenko to the US. According to the authorities, this decision was made after a comprehensive review to ensure that the extradition does not disproportionately infringe on the fundamental rights of the individuals.
Currently, the specific timeline for their extradition to the U.S. remains unclear, however the duo might each serve up to 20 years in prison if convicted.
