US appeals lenient sentences in HashFlare $577M fraud case
United States prosecutors appealed the time served sentences given to HashFlare founders Sergei Potapenko and Ivan Turõgin, seeking 10-year prison terms for running a $577 million fraud scheme.
The appeal was filed in Seattle federal court on Tuesday. Judge Robert Lasnik sentenced the pair to time served on August 12 with $25,000 fines and 360 hours of community service.
Potapenko and Turõgin were extradited from Estonia in May 2024. Both men pleaded guilty to conspiracy to commit wire fraud. Estonian authorities arrested the founders in October 2022. The pair spent 16 months in custody before transfer to the United States.
Prosecutors said HashFlare used fabricated dashboards showing fake mining activity and profits. Customer payouts came from new investor deposits according to government filings.
Defense lawyers argued that customers benefited because cryptocurrency prices rose after the scheme ended. The legal team said victims will receive full repayment from more than $400 million in forfeited assets.
Prosecutors disputed the repayment claims and said they were based on fabricated data. The government maintains that not all victims will recover their losses.
HashFlare operated between 2015 and 2019, generating more than $577 million in sales. The company overstated mining capacity and used customer funds to pay earlier investors according to court documents.
Potapenko and Turõgin were extradited from Estonia in May 2024. Both men pleaded guilty to conspiracy to commit wire fraud. Estonian authorities arrested the founders in October 2022. The pair spent 16 months in custody before transfer to the United States.
Prosecutors said HashFlare used fabricated dashboards showing fake mining activity and profits. Customer payouts came from new investor deposits according to government filings.
Defense lawyers argued that customers benefited because cryptocurrency prices rose after the scheme ended. The legal team said victims will receive full repayment from more than $400 million in forfeited assets.
Prosecutors disputed the repayment claims and said they were based on fabricated data. The government maintains that not all victims will recover their losses.
HashFlare operated between 2015 and 2019, generating more than $577 million in sales. The company overstated mining capacity and used customer funds to pay earlier investors according to court documents.
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