Two Estonian defendants behind one of the largest fraud schemes in U.S. crypto history have received their sentences in federal court in Seattle.
Sentencing of HashFlare Founders
Sergei Potapenko and Ivan Turõgin, co-founders of the crypto mining company HashFlare, were sentenced to time served in federal court in Seattle. Judge Robert Lasnik issued the sentence considering they had already served 16 months in custody. Additionally, each was ordered to pay a $25,000 fine and complete 360 hours of community service.
Details of the Fraud Scheme
Prosecutors claim that Potapenko and Turõgin ran a classic Ponzi scheme, deceiving over 440,000 customers globally. From 2015 to 2019, they lured investors with false promises of cryptocurrency mining profits while actual investments were used to pay earlier participants. HashFlare reportedly generated over $577 million from sales, misleading customers with fabricated activity metrics.
Government's Response
The Department of Justice is considering whether to appeal the decision, as prosecutors initially sought 10-year prison terms. Nonetheless, the judge noted the defendants forfeited over $400 million in assets as part of their plea agreement and highlighted that most customers, at least partially, recovered their investments.
The sentencing of the HashFlare founders marks the conclusion of one of the most high-profile fraud cases in the cryptocurrency sector, emphasizing the need for investor protection in the rapidly evolving world of digital currencies.
