The founders of defunct crypto mining company HashFlare , Sergei Potapenko and Ivan Turõgin, have escaped further prison time after admitting their roles in what prosecutors described as a $577 million Ponzi scheme. The pair, who had already spent 16 months in custody, were sentenced on Tuesday by Seattle Federal Court Judge Robert Lasnik to time served, a $25,000 fine each, and 360 hours of community service. They will serve their supervised release in Estonia, their home country. The U.S. Department of Justice (DOJ) said it is considering an appeal, as prosecutors had sought a 10-year prison sentence. HashFlare founders had argued for time served, a request the judge ultimately granted. Largest Fraud Case in Seattle Court History The DOJ described the case as the largest fraud ever tried in Seattle federal court. The Estonian nationals were arrested in November 2022 in their home country and extradited to the U.S. in May 2024, later pleading guilty to conspiracy to commit wire fraud. Prosecutors alleged that between 2015 and 2019, HashFlare generated over $577 million in sales, operating as a “classic Ponzi scheme” by using funds from new customers to pay existing ones. Fake dashboards were allegedly used to mislead investors about the company’s mining capacity and returns. Judge Lasnik’s decision appeared to factor in the defendants’ forfeiture of more than $400 million in assets as part of a plea deal. He also noted that a large number of customers did not suffer net losses — with 390,000 of the 440,000 affected clients reportedly withdrawing a total of $2.3 billion after investing $487 million in mining contracts. HashFlare Founders’ Lavish Spending Acting U.S. Attorney Teal Luthy Miller called the scheme “a mirage of cryptocurrency mining,” alleging that the pair diverted millions to personal luxuries, including real estate, luxury cars, jewelry, private jet trips, and personal Bitcoin purchases. The sentencing comes after months of legal confusion over the defendants’ immigration status. In April, despite a court order to remain in the U.S., Potapenko and Turõgin received a Department of Homeland Security letter directing them to “deport immediately.” Their lawyers claimed the conflicting instructions caused significant uncertainty about their future. The HashFlare founders have repeatedly expressed their wish to return home, a prospect now likely as they begin their supervised release in Estonia. Meanwhile, the DOJ must decide whether to challenge the leniency of the ruling in what it views as a landmark fraud case. The post HashFlare Founders Avoid Further Jail Time in $577M Ponzi Scheme Case appeared first on TheCoinrise.com .
