Co-Founders of the cryptocurrency mining company HashFlare, who were sentenced for orchestrating a $577 million Ponzi scheme, have been given relief from spending additional jail time. On Tuesday, Seattle Federal Court Judge Robert Lasnik decided that they both would not serve additional jail time beyond the 16 months that they already spent in custody.
Apart from spending 16 months in jail, Sergei Potapenko and Ivan Turõgin were ordered by Judge Robert Lasnik to pay a $25,000 fine and do 360 hours of community service while being monitored in their home country, Estonia.
However, prosecutors have sought a 10-year prison sentence for the HashFlare founders, but the founders requested their release without any further jail time.
In November 2022, Sergei Potapenko and Ivan Turõgin were arrested in Estonia. Later in May 2024, they were sent to the U.S., where they pleaded guilty for planning to commit wire fraud.
HashFlare Case: Largest Fraud in Seattle Court History
Seattle prosecutors have labeled the HashFlare case as the largest fraud ever prosecuted in the district’s history. From 2015 to 2019, the company had allegedly deceived 440,000 customers.
The company used fake dashboards to exaggerate its mining capabilities and investor profits, paying early investors with funds from new clients, a classic Ponzi scheme tactic.
Prosecutors also claimed that the HashFlare founders had siphoned off millions for personal use. It claimed the founders spent the funds on Bitcoin, real estate, luxury cars, jewelry, and private jet travel.
But the defense argued that the harm to customers was not that severe, as the founders gave up over $400 million in assets in a February deal. They also pointed out that 390,000 customers, who invested $487 million, withdrew $2.3 billion from the platform.
Additionally, in April, Potapenko and Turõgin faced confusion when the Department of Homeland Security told them to leave the U.S. immediately, even though a court had ordered them to stay. Both had repeatedly expressed their desire to return to their home country, Estonia.
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