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Estonian Government to Allow Extradition of Hashflare Defendants

The Estonian government has cleared the way for the extradition of HashFlare's co-founders, Ivan Turogin and Sergei Potapenko, to the United States.

In a significant turn of events, the Estonian government is set to allow the extradition of Ivan Turogin and Sergei Potapenko, co-founders of the now-inactive Bitcoin cloud miner, HashFlare, to the United States. The pair faces a daunting 18 charges in the U.S., including conspiracy, wire fraud, and money laundering allegations. If convicted, they could be sentenced to up to 20 years in prison each. HashFlare, once a prominent player in the cloud mining space, is accused of operating as a Ponzi scheme.

Extradition Hurdles Overcome

Turogin and Potapenko, both Estonian citizens, were initially arrested in Estonia in November 2022, following a comprehensive investigation involving authorities from both the U.S. and Estonia. The Estonian government initially approved their extradition in September, but the process hit a roadblock in November when they successfully appealed the decision. At that time, a court ruled that the lower court had failed to consider the conditions in U.S. detention facilities. Instead, the higher court ordered that the individuals should receive monetary compensation.

Government’s Compliance

Now, the Estonian government has gathered evidence regarding the conditions in U.S. detention facilities, suggesting that the extradition will not disproportionately infringe on the individuals' fundamental rights. This development has paved the way for their extradition to proceed, potentially putting an end to a long-standing legal battle.

HashFlare’s Controversial Past

HashFlare, prior to its collapse in 2019, had garnered a staggering $575 million. However, it had been facing issues since the preceding year when it began shutting down some of its mining operations, citing revenue shortages. The U.S. Department of Justice (DOJ) alleges that Turogin and Potapenko lured victims with contracts that promised a share of HashFlare’s mining operations in exchange for fees. In reality, the company did not possess the equipment or computing power it claimed.

Wide-ranging Impact

The scam is said to have affected "hundreds of thousands" of victims, as per the DOJ's claims. The U.S. Federal Bureau of Investigation (FBI) is still actively searching for additional victims. Furthermore, Turogin and Potapenko face accusations of collecting $25 million from investors for the establishment of a digital bank, which they intended to name Polybius. However, they failed to fulfill these plans.

The pending extradition of the HashFlare defendants marks a significant step in addressing the alleged fraudulent activities that left countless victims in their wake. This development underscores the ongoing efforts to combat financial crimes within the cryptocurrency space.