Defunct HashFlare Co-founders Arrested For Crypto Fraud

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  • The mining firm shut down a substantial chunk of its mining activities in July 2018.
  • The whole mining operation was part of a “multi-faceted scheme” as per U.S DOJ.

As part of an alleged $575 million crypto fraud scheme. The two co-founders of the defunct Bitcoin cloud mining service HashFlare have been detained in Estonia. HashFlare, founded in 2015, claimed to be a cloud mining service. Where consumers could lease the company’s hashing power to mine cryptocurrency and split the revenues proportionally.

The corporation was recognized as one of the main names in the market at the time. But shut down a substantial chunk of its mining activities in July 2018.

Up to 20 Years in Prison if Convicted

According to court records cited in a statement released by the United States Department of Justice (DOJ). The whole mining operation was part of a “multi-faceted scheme” that “defrauded hundreds of thousands of victims.”

Some were duped into “fraudulent equipment rental contracts” on HashFlare, while others were convinced to invest in a phoney virtual currency bank named Polybius Bank. Additionally, the two are charged with plotting to launder their “criminal proceeds” via 75 properties, 6 luxury automobiles, cryptocurrency wallets, and thousands of cryptocurrency mining equipment.

The magnitude and breadth of the alleged plot were described as “truly astounding” by U.S. Attorney Nick Brown for Washington’s Western District.

The HashFlare founders have been charged with conspiracy to conduct wire fraud, 16 counts of wire fraud, and one count of conspiracy to commit money laundering using shell companies and bogus invoices and contracts, and may face up to 20 years in prison if convicted.

By July 2018, HashFlare had declared it will no longer provide Bitcoin mining services, citing the difficulties of turning a profit amidst market volatility.

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