August 11, 2025

HashFlare Co-Founders Seek Leniency Ahead of Sentencing in $577M Crypto Fraud Case

2 min read

The co-founders of now-defunct crypto mining service HashFlare are asking a U.S. federal judge for leniency ahead of their sentencing for wire fraud, while prosecutors are pushing for a decade behind bars. Sergei Potapenko and Ivan Turõgin, who pleaded guilty earlier this year to conspiracy to commit wire fraud, argue that they have already served significant time in Estonian custody and have cooperated with U.S. authorities. In a sentencing memo filed Wednesday in Seattle federal court, prosecutors called for 10-year prison terms for each of the men, labeling the case as the most extensive crypto fraud ever tried in that jurisdiction. Prosecutors said the scheme cost victims an estimated $300 million and involved selling $577 million worth of fraudulent mining contracts between 2015 and 2019 . Defense Claims Losses Are Overstated In their own memo, Potapenko and Turõgin disputed the extent of financial harm caused, noting that many HashFlare customers actually profited due to rising cryptocurrency prices. They argue that of the $487 million customers spent on mining contracts, roughly $2.3 billion was later withdrawn, resulting in limited long-term financial damage for many. Their attorneys also emphasized that the pair spent 16 months behind bars in Estonia before being extradited to the U.S. in May 2024. They are currently out on bail and awaiting sentencing, scheduled for August 14. The defense team further noted that over $400 million in assets have been forfeited as part of their February plea deal, and these funds are expected to be used to repay all victims in full. Strong Deterrence in HashFlare Ponzi Scheme? Despite the defendants’ claims, prosecutors maintained that HashFlare was a textbook Ponzi scheme. They said Potapenko and Turõgin faked mining capacity, posted fabricated returns, and paid earlier investors with money from new ones — all while funding lavish personal lifestyles. The memo urged Judge Robert Lasnik to impose a sentence that reflects “the seriousness of the offense” and deters future crypto-related fraud. Prosecutors also dismissed arguments that the case should have been tried in Estonia, pointing out that over 50,000 of HashFlare’s 440,000 customers were based in the U.S. and had collectively invested more than $130 million. Meanwhile, Potapenko and Turõgin continue to seek deportation to Estonia. Though a U.S. court ordered them to remain in the country, they received a letter in April from the Department of Homeland Security suggesting they should “deport immediately,” raising questions about how international crypto crime cases will be handled moving forward. The post HashFlare Co-Founders Seek Leniency Ahead of Sentencing in $577M Crypto Fraud Case appeared first on TheCoinrise.com .

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