The two Estonian men behind one of the largest crypto-related fraud cases in U.S. history have avoided additional prison sentences after admitting their roles in a $577 million Ponzi scheme.
Sergei Potapenko and Ivan Turõgin, co-founders of the now-defunct crypto mining firm HashFlare, were sentenced on Tuesday in Seattle federal court to time served, having already spent 16 months in custody. Judge Robert Lasnik also ordered each man to pay a $25,000 fine, complete 360 hours of community service, and serve their supervised release in Estonia.
The Department of Justice (DOJ) said it is reviewing whether to appeal the decision after prosecutors had pushed for 10-year prison terms. Potapenko and Turõgin had requested time served, a plea the judge ultimately granted.
The pair were arrested in Estonia in November 2022 and extradited to the United States in May 2024. In February, they pleaded guilty to conspiracy to commit wire fraud. Prosecutors described the case as the largest fraud they had ever prosecuted in Seattle, alleging the men lured more than 440,000 customers worldwide with fake cryptocurrency mining returns between 2015 and 2019.
According to the DOJ, HashFlare generated over $577 million in sales during that period, presenting fabricated online dashboards to show non-existent mining activity. The scheme operated as a classic Ponzi, using funds from new investors to pay earlier participants while the defendants siphoned off millions for personal luxuries — including Bitcoin purchases, high-end real estate, luxury vehicles, jewelry, and more than a dozen private jet trips.
“These defendants were operating a classic Ponzi scheme, involving a glitzy asset: a mirage of cryptocurrency mining,”
said Acting U.S. Attorney Teal Luthy Miller.
Judge Lasnik noted that the defendants had forfeited more than $400 million in assets as part of their plea deal and highlighted evidence suggesting most customers recovered or profited from their investments. Court records showed that 390,000 customers who spent $487 million on HashFlare contracts collectively withdrew $2.3 billion.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
