The two founders of the now-defunct cloud mining company Hashflare have been arrested in Estonia on charges of alleged involvement in cryptocurrency fraud and money laundering involving $575 million.
It is reported that HashFlare is a cloud mining company founded in 2015, which claims to allow customers to lease the company’s hash value in order to mine cryptocurrencies and receive an equal share of profits.
According to a statement from the U.S. Department of Justice citing court documents, the entire mining operation run by founders Sergei Potapenko and Ivan Turõgin was part of a multifaceted scheme that defrauded hundreds of thousands of victims, which, among other things, persuaded victims to sign up with HashFlare. Fraudulent equipment rental contracts, and convincing other victims to invest in a fake virtual currency bank called Polybius bank.
As previously reported, in July 2018, cloud mining company Hashflare announced that it was forced to terminate all Bitcoin mining contracts due to unprofitable business.