Recent reports indicate that U.S. prosecutors have filed an appeal against the sentence handed down to HashFlare founders who were found guilty of fraud.
The Case Against HashFlare
Founders Sergei Potapenko and Ivan Turõgin were accused of running a fraudulent scheme that raised over $577 million from investors. A Seattle court issued a sentence without prison time, despite prosecutors seeking a 10-year term. Judge Robert Lasnik only imposed time served while awaiting trial.
Defense and Arguments
Attorneys for Potapenko and Turõgin contended that customers ultimately received cryptocurrency worth more than their original investments due to market appreciation after HashFlare's collapse. They also cited $400 million in assets forfeited under the plea agreement, which could be used to compensate victims. Prosecutors dismissed these claims, stating much of the supporting data was fabricated.
Impact on the Cryptocurrency Industry
The HashFlare case has drawn attention from blockchain researchers who warn that lenient punishments and inconsistent enforcement may encourage repeat scams. Criminal activity in the crypto space surged in 2025, with reported losses in the first half of the year already surpassing 2022 records.
The Ninth Circuit will now review the government’s appeal, which could determine whether Potapenko and Turõgin face additional jail time.
