Sergei Potapenko and Ivan Turõgin, known as the HashFlare founders, are set to serve up to a decade in prison after confessing to wire fraud.
The duo of the collapsed crypto mining platform, are pleading for leniency after the 10-year prison sentence has been announced.
They insist they have already served enough prison time and should walk free.
However, the case has ignited fierce debate over justice, victim losses, and the murky world of crypto scams. It is currently being held in Seattle’s Federal Court under Judge Robert Lasnik,
Prosecutors during the sentencing branded HashFlare a “classic Ponzi scheme” that swindled $577 million from 440,000 investors worldwide between 2015 and 2019.
How did HashFlare founders scam their victims?
Prosecutors allege HashFlare founders lured victims with promises of lucrative crypto mining returns. Instead, they faked profits and paid early investors with funds from new ones.
It is reported that a staggering $300 million in losses were suffered by the victims. Much of the losses are attributed to Potapenko and Turõgin’s lavish lifestyles.
“This was a horrible crime,” prosecutors said.
They argue that a decade behind bars is the only way to reflect the largest fraud case the court has ever seen.
Another point of view from HashFlare founders
Potapenko and Turõgin, however, paint a different picture.
In their joint sentencing memo, they argue HashFlare’s 390,000 customers reaped massive profits.
They say customers withdrew $2.3 billion thanks to soaring crypto prices since the platform’s collapse.
The duo claim their overstatements about mining capacity were mere missteps and not malicious.
They added that forfeited assets worth over $400 million will fully compensate victims.
Having spent 16 months in Estonian custody before their 2024 extradition to the U.S., the founders insist further jail time is excessive.
The drama began with their 2022 arrest in Estonia. They were then extradited to the U.S. in May 2024.
Their plea for deportation back to Estonia adds a twist, raising questions about how U.S. courts handle foreign nationals in cross-border crypto crimes.
Complicating matters, a perplexing letter from the Department of Homeland Security reportedly urged their immediate deportation, despite a court order keeping them stateside.
Prosecutors remain unmoved, dismissing arguments that an Estonian court should have jurisdiction.
They point out that over 50,000 U.S.-based investors poured $130 million into HashFlare, justifying American oversight.
The sentence, they argue, must deter future crypto fraudsters and protect the public from schemes of this magnitude.
