In a developing story, HashFlare duo Sergei Potapenko and Ivan Turõgin are sentenced to time served for one of the largest cryptocurrency fraud cases in U.S. history.
The HashFlare duo previously pleaded guilty to their crime of the massive $577 million Ponzi scheme.
However, Federal Judge Robert Lasnik handed down the ruling, allowing the Estonian nationals to avoid additional prison time. They had served 16 months in custody by this time.
For context, the HashFlare duo, Sergei and Turõgin were arrested in Estonia in November 2022 and extradited to the United States in May 2024.
The duo pleaded guilty to conspiracy to commit wire fraud.
Prosecutors from the Seattle U.S. The Attorney’s Office had pushed for a 10-year prison sentence. They emphasized the scheme’s scale as the biggest fraud ever prosecuted in the Western District of Washington.
However, Judge Lasnik appeared swayed by the defense’s arguments. He noted they had forfeited over $400 million in assets as part of a February plea deal.
Additionally, of the 440,000 customers who invested $487 million in HashFlare’s mining contracts, around 390,000 withdrew a staggering $2.3 billion, mitigating claims of widespread losses.
The Future of the HashFlare Duo
Beyond time served, Potapenko and Turõgin were each ordered to pay a $25,000 fine and complete 360 hours of community service.
Their supervised release will likely occur in Estonia, where they plan to return.
The Department of Justice announced it is considering an appeal, citing dissatisfaction with the lenient outcome.
How did the HashFlare Scam happen?
Prosecutors described HashFlare, operational from 2015 to 2019, as a “classic Ponzi scheme” disguised as a legitimate cloud mining service.
The company allegedly displayed fake dashboards inflating mining capacities and returns, using new investors’ funds to pay earlier ones.
“These defendants were operating a classic Ponzi scheme, involving a glitzy asset: a mirage of cryptocurrency mining,”
U.S. Attorney Teal Luthy Miller
Authorities claimed the founders diverted millions for personal luxuries, including Bitcoin purchases, real estate, luxury cars, jewelry, and over a dozen private jet trips.
As the cryptocurrency sector faces increased safety concerns, HashFlare duo’s case stands out as one that highlights the challenges in prosecuting international schemes.
In this critical landscape, it is imperative that one follows best safety practices to safeguard one’s assets.
