The founders of the cryptocurrency mining company HashFlare avoided additional imprisonment after admitting to participating in a $577 million Ponzi scheme.
Sergei Potapenko and Ivan Turõgin have been detained for 16 months, with Seattle Federal Judge Robert Lasnik considering the time served as the final ruling in Tuesday's decision.
The judge also ordered them to each pay a $25,000 fine and complete 360 hours of community service during the supervised release period, which is expected to be carried out in their home country of Estonia.
The U.S. Department of Justice stated on Tuesday that it is considering whether to appeal, as prosecutors had requested a 10-year prison sentence, while Potapenko and Turõgin requested that the time served be considered.
The two were arrested in Estonia in November 2022 and extradited to the U.S. in May 2024, where they admitted to conspiracy to commit telecommunications fraud.
The largest fraud case in court history.
The Seattle prosecutors described this as the largest fraud case they have handled, using it as a reason to push for a 10-year sentence.
Judge Lasnik stated that Potapenko and Turõgin surrendered assets valued at over $400 million, and 390,000 customers have withdrawn $2.3 billion, thereby reducing the fraud impact on the 440,000 customers.
HashFlare is a 'classic Ponzi scheme'.
Prosecutors claimed that between 2015 and 2019, HashFlare sold a total of over $577 million, displayed false profit data, and used funds from new customers to pay off old members.
“These defendants operated a typical Ponzi scheme, fabricating cryptocurrency mining profits,” said Acting U.S. Attorney Association Teal Luthy Miller.
“Like a typical Ponzi scheme, they turned millions of dollars into personal use, purchasing Bitcoin, real estate, luxury cars, luxury jewelry, and flying on private planes multiple times.”
The defendants received a 'voluntary departure' notice.
Although the court required the two to remain in the United States, they received a letter from the Department of Homeland Security instructing them to 'depart immediately', causing confusion about their future.
