HashFlare Founders Receive Time Served for $577M Crypto Ponzi Scheme
Sergei Potapenko and Ivan Turõgin, co-founders of crypto mining firm HashFlare, have avoided additional prison time after admitting their roles in a $577 million Ponzi scheme.
U.S. District Judge Robert Lasnik in Seattle ruled on Tuesday that the 16 months the pair had already spent in custody would be counted as time served. Each was also ordered to pay a $25,000 fine and complete 360 hours of community service, to be carried out in their home country of Estonia. Upon release, they will remain under supervised release.
The U.S. Department of Justice said it is considering an appeal, as prosecutors had sought 10 years in prison, while the defense had requested time served.
Largest Fraud Case in Seattle’s History
The two men were arrested in Estonia in November 2022 and held for 16 months before being extradited to the United States in May 2024. They later pleaded guilty to conspiracy to commit wire fraud.
Prosecutors called the case the largest fraud ever tried in Seattle’s federal court, alleging that from 2015 to 2019 HashFlare sold over $577 million in fake mining contracts, displayed falsified mining capacity and returns on investor dashboards, and used funds from new customers to pay existing ones — a classic Ponzi scheme.
The DOJ claimed the founders diverted millions for personal gain, purchasing Bitcoin, real estate, luxury cars, expensive jewelry, and taking more than a dozen trips on private jets.
Defense Argued Losses Were Limited
Defense attorneys argued that 390,000 customers withdrew a total of $2.3 billion from the platform, meaning losses were relatively limited. They also noted that the February plea deal included the forfeiture of over $400 million in assets, which likely influenced the lighter sentence.
Confusion Before Sentencing
In April, despite being ordered to remain in the U.S., the pair reportedly received a “self-deport” letter from the Department of Homeland Security instructing them to leave the country immediately — causing confusion about their status. Both had repeatedly expressed their wish to return to Estonia, and Tuesday’s ruling paves the way for that return.
