Hashflare, or hashflare.io, was one of the biggest cryptocurrency scams to ever rock the world. The scam unfolded mainly between 2015 and 2019, resulting in a loss of approximately $577 million to over 400k victims. Notably, the majority of the victims were Americans.
The masterminds were later arrested and extradited to the US and eventually released to be sent back to their home country. Here’s a detailed look at how the HashFlare scam unfolded, the tactics used to deceive investors, and what ultimately happened to its founders.
Hashcoins
In 2013, two Estonian individuals, Ivan Turõgin and Sergei Potapenko, established a dubious enterprise called Hashcoins. The company claimed to make and sell cryptocurrency mining equipment. The company attracted many buyers by making grandiose claims. For example, it claimed that it was one of the first companies in Eastern Europe to offer crypto mining hardware.
It lured many investors by also capitalizing on being in the right niche at the right time. Bitcoin mining was booming, and the demand for mining hardware was high. Plus, Estonia had already gained an international reputation as a digital hub.
Hashcoins OU established a convincing and professional-looking website. The site displayed photos of advanced cryptocurrency mining hardware. Customers were misled to believe that it was capable of mining different types of digital currencies, such as;
- ZCASH
- SHA-256 (bitcoin)
- Scrypt
- ETHASH (ether)
- DASH
In reality, Hashcoins OU did not manufacture mining hardware throughout its existence. Instead, it purchased only a small amount of mining equipment elsewhere, reassembled and sold it to a few. Many buyers who paid did not receive anything, including a refund.
By late 2014, the company had begun facing complaints over unfulfilled promises, forcing it to “improvise”. To pacify customers, it later devised a new business model: remote mining contracts through Hashflare(hashflare.io).
Hashflare LP
Hashflare next claimed to offer access to hashrate purportedly generated by the company’s own digital currency mining equipment. Instead of physical mining equipment, investors were supposedly offered the opportunity to “rent” a certain amount of hashrate. The company claimed to have its mining hardware virtually.
Investors paid for the “hashrate” and expected to get returns. When they attempted to withdraw their profits, either of the following happened:
- Their withdrawal requests were declined.
- They were rewarded with digital currencies that the company had simply bought on the open market, as opposed to mined.
Almost 440,000 victims worldwide lost their hard-earned money over the course of this fraudulent crypto mining operation(2015-2019). A total of $577 million was gained through it.
The Polybius Fictitious Bank(2017)
In 2017, Turõgin and Potapenko formed a dubious virtual bank called Polybius. They fraudulently presented it as a regulated blockchain-based bank headquartered in Estonia. Through it, they fraudulently raised tens of millions of dollars.
Hash Coin, Hashflare, & Polybius Key Masterminds
The entire scam operation was launched and orchestrated by Ivan Turõgin, an Estonian citizen, and Sergei Potapenko, also from Estonia. They were later joined by four unnamed co-conspirators: three Estonian citizens and one Belarusian citizen.
Turõgin and Potapenko were arrested on Nov. 20, 2022, in Tallinn. The arrest came after a well-coordinated raid conducted by the Central Criminal Police of Estonia.
After remaining in remand until May 2024, the authorities extradited them to the US to face charges.
Out of the original charges, the defendants pleaded guilty to one count of conspiracy to commit wire fraud.
As part of their plea bargain, they let go of their ill-acquired assets worth over $450 million.
However, in August 2025, Judge Robert S. Lasnik issued a release order. Lasnik cited the fact that they had already served 16 months in jail in their home country. Turogin and Potapenko will serve their supervised release in Estonia, where they will be doing up to 360 hours of community service.
In addition, the judge ordered them to pay a $25,000 fine each.
The Portion Of The $577 Million That Has Already Been Recovered
- 74 flats and apartments in different parts of Estonia.
- 6 luxury cars
- Money in two local bank accounts.
- All digital assets.
- 15 bitcoin mining equipment.
The seized assets, worth over $450 million, are now in the custody of Estonian and U.S. authorities. However, the U.S. government will handle the final forfeiture process. After all, most victims were Americans or American residents.
Hashflare’s Possible Link to SB Global(sbglobal.io)
Scamreader recently received a complaint against SB Global(sbglobal.io). The victim had lost hundreds of thousands within 2 years of dealing with this purported broker.
Upon conducting a thorough probe, we found some connecting dots.
strong connections to the Hashflare cryptocurrency scheme.
- Bank account — One of the accounts that the victim transferred funds to is at AS LHV Pank. The account in question is: IBAN account EE357777000147942533.
Notably, AS LHV Pank is the same bank that the US government identified as being used by the Hashflare masterminds. It listed the following accounts as belonging to the Hashflare scam perpetrators: IBAN account EE947700771004802203 and IBAN account EE 627700771002171363. These three accounts are offerings of the AS LHV Pank.
- Geographic location — In another transaction, the victim transferred money from his bank account, which was later cashed out in Switzerland. Yet according to the U.S. Department of Justice, Turõgin and Potapenko worked with four unnamed co-conspirators. Notably, one of them resides in Baar, Switzerland. Could this be the same individual who withdrew our client’s 7200 euros in Switzerland?
SB Global could be part of Turõgin’s and Potapenko’s, or their associate’s fraudulent schemes: Hashcoins, Hashflare, and Polybius. The details about its specific role are not fully disclosed. However, the above evidence suggests it might be linked to the fraudulent scheme.
Hashflare FAQs
1. Why did HashFlare shut down?
Answer: It was a scam.
2. Can I still recover my funds from this scam?
Answer: Yes. To do so, go to this page to report your case.
3. Were the scammers’ co-conspirators also arrested?
Answer: There’s currently no information suggesting that the 4 anonymous accomplices were also taken into custody.
4. Where are Potapenko and Turõgin now?
Answer: They are likely still in the US, waiting to return to their home country after detention.
5. How much has the government recovered from Sergei Potapenko and Ivan Turõgin?
Answer: The US government, in collaboration with the Estonian government, has recovered over $450 million in assets, following the defendants’ plea agreement.
6. What are some wallet addresses linked to Potapenko and Turogin?
Answer: These are some of the wallet addresses:
- 38zkvJL6ZSM8tS7DFw4V37gBxqj8VVBFS9
- 3JQZFeomJtgQvfhJPriibVVUcmDDvbCu4L
- 0x37Aa343C7b3A8d5cB7E1D53e262BcE5c56840DC0
- 0x05524556b53254ea27bF85C572Ff173A9b72e049
- 33oxyJj3rUyY9h9A2LMev8hGp9LfTPRFPT
- bclqq7t39xw5zmquvrxqpcw4xmrmj968geueufjwh9
- bclq3neh8n6e0e2hqp5v50498je5kjp5nv0s52j6sy