The co-founders of cryptocurrency company HashFlare have approached the court for a sentence reduction following their admission of fraud. Prosecutors are requesting a ten-year prison term.
Request for Sentence Reduction
The legal proceedings against HashFlare co-founders Sergey Potapenko and Ivan Turõgin are ongoing in federal court in Seattle. Prosecutors are urging the court to impose ten years in prison for their involvement in a $577 million Ponzi scheme that resulted in approximately $300 million in victim losses.
Defense Arguments
Lawyers for Potapenko and Turõgin assert that despite overstating their company's mining capacity, customers received cryptocurrency worth significantly more than their initial investments. They noted that 390,000 customers who spent $487 million on HashFlare contracts have since withdrawn $2.3 billion. The defense also claimed that all potential victims would be fully compensated through the forfeited assets from their plea deal.
Crime and Its Impact
Prosecutors characterized the actions of the co-founders as a 'horrible crime', highlighting the scale of the fraud and its aftermath. They stated that between 2015 and 2019, the pair sold $577 million worth of mining contracts, paying out false returns to customers with money obtained from newer clients. Prosecutors argue this represents a classic Ponzi scheme and that the sentence should reflect the seriousness of the offense.
The HashFlare case remains a focal point in the court system as both sides present their arguments, with sentencing set for August 14.
