I wonder if the victims of this scheme will be able to get at least hope?

Two Estonian entrepreneurs, Sergei Potapenko and Ivan Turogin, founders of the notorious company HashFlare, have breathed a sigh of relief after a lengthy U.S. court case – the judge credited them for time already served in custody, meaning they will not spend any more years behind bars.
Federal Judge Robert Lasnik in Seattle sentenced them to 16 months in prison, which they have already served since their indictment in 2022. However, they are not walking away scot-free – they must pay a $25,000 fine, complete 360 hours of community service, and face the forfeiture of assets worth more than $450 million, including real estate, cars, cryptocurrencies, and mining equipment. These assets were seized by the U.S. government together with international partners. Both will now return to Estonia under supervision.
Details on the distribution of seized assets to victims have not yet been disclosed.

Prosecution: The largest crypto fraud investigated in the U.S.
The U.S. Department of Justice has labeled the HashFlare case as the largest crypto fraud ever investigated by their offices. Prosecutors say the company defrauded over 440,000 customers between 2015 and 2019, falsely claiming to mine large volumes of cryptocurrency – when the reality was drastically different.
Investigators found that HashFlare mined less than 1% of the amount it claimed, yet collected over $550 million from clients. In 2017, under the guise of launching the Polybus digital bank, it also secured $25 million from investors.

Luxury at the expense of victims
According to Acting U.S. Attorney Teal Miller, most victims suffered not only financial losses but also emotional harm. Potapenko and Turogin used client funds to purchase cryptocurrency for themselves, luxury cars, jewelry, real estate, and even private jet rentals.
“This was a classic Ponzi scheme – millions of dollars diverted into their pockets while the victims lost their money,” Miller stated.

Defense: Customers lost little
Judge Lasnik ultimately partially accepted the defense’s argument that losses were not as severe. According to HashFlare data, about 390,000 customers who purchased mining contracts worth nearly $487 million withdrew approximately $2.3 billion.
Attorney Andery Spektor even claimed that no one suffered actual financial harm, though he admitted the company may have misled customers about mining volumes.

Appeal still on the table
Despite the ruling, prosecutors are considering an appeal, arguing that the victims’ losses were real and significant. They also claim that the defendants fabricated data and that the expert report presented by the defense focused on the company’s profits rather than the actual losses to clients.
The seized assets are intended for victim compensation, but it remains unclear when and in what amounts the funds will be distributed.

#CryptoFraud , #Cryptoscam , #CryptoNews , #blockchain , #CryptoCommunity

Stay one step ahead – follow our profile and stay informed about everything important in the world of cryptocurrencies!
Notice:
,,The information and views presented in this article are intended solely for educational purposes and should not be taken as investment advice in any situation. The content of these pages should not be regarded as financial, investment, or any other form of advice. We caution that investing in cryptocurrencies can be risky and may lead to financial losses.“