HashFlare founders receive lenient sentence, U.S. prosecutors file appeal

In a recent development, U.S. federal prosecutors have appealed to the Ninth Circuit Court to overturn the sentencing of Estonian citizens Sergei Potapenko and Ivan Turõgin. The two were convicted for operating the $577 million cryptocurrency mining scam HashFlare but were only sentenced to three years of supervised release and a fine of $25,000 each, which is less than the 10 years of imprisonment sought by the prosecution. While the sentence is viewed as overly lenient, the Ninth Circuit typically respects the discretion of district judges unless the ruling is clearly unreasonable. Judge Robert S. Lasnik made his decision after considering factors such as the time already served by the defendants, risks of extradition, and victim compensation, noting that if the treaty transfer is not approved, the defendants could face harsher imprisonment and indefinite detention. HashFlare deceived 440,000 victims worldwide between 2015 and 2019, and the defendants have forfeited $400 million for compensation. Prosecutors argue that the sentence is too lenient, affecting its consistency and deterrent effect, raising serious concerns.