HashFlare crypto-mining service co-founders Sergei Potapenko and Ivan Turõgin asked a US judge for leniency at their sentencing hearing. Prosecutors insist on a 10-year prison sentence for orchestrating an alleged $577 million Ponzi scheme.
Plea Agreements and Current Status
Prosecutors submitted a memo to Seattle Federal Court Judge Robert Lasnik requesting a 10-year sentence for Potapenko and Turõgin, citing their “horrible crime” that caused approximately $300 million in losses and involved the company’s status as the largest fraud the court had tried. The men were arrested in Estonia in November 2022, held for 16 months, and extradited to the US in May 2024. They both pleaded guilty to conspiracy to commit wire fraud while out on bail, with sentencing scheduled for August 14.
Defense Argues for Leniency
Defense lawyers submitted a counter-memo arguing that despite Hyperjump (the firm behind HashFlare) exaggerating mining capacity, customers received value commensurate with crypto price increases, ultimately withdrawing significant sums. They stated 390,000 customers spent $487 million but later withdrew $2.3 billion, suggesting less financial hardship than charged. The defense also noted full restitution would draw funds from an approximately $400 million asset forfeiture from a separate plea deal, and that neither man should face an additional decade in prison.
Prosecution Outlines Fraud Scale
Prosecutors detailed the fraudulent scheme: the pair allegedly sold $577 million in mining contracts to ~440,000 customers between 2015 and 2019, funded with proceeds from newer investors. They termed it a classic Ponzi scheme where fake returns funded payouts to older investors, ultimately enabling “lavish lifestyles” and funding much of the fraud. They called the sentence requirement the magnitude of the loss and number of US victims ($130 million invested by US customers).
Deportation Request
The defendants still request permission to return to Estonia, raising questions about US jurisdictional authority in cross-border crypto crimes. They recently petitioned a court ordering them to remain in the US stating they were directed by the Department of Homeland Security (“DHS”) to be deported immediately, creating confusion about their legal status since May 2024.
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