HashFlare Founders Dodge Prison in $577M Crypto Ponzi Case
The two men behind HashFlare, a now-defunct crypto mining operation that turned out to be a massive Ponzi scheme, won’t serve any additional jail time—at least for now. Sergei Potapenko and Ivan Turõgin, both from Estonia, were sentenced this week to time served after spending 16 months in custody.
Seattle’s federal judge Robert Lasnik handed down the decision, along with a $25,000 fine for each and 360 hours of community service. They’ll serve their supervised release back in Estonia, assuming no last-minute appeals. And that’s still a possibility—prosecutors had pushed for a full decade behind bars, so the DOJ might challenge the ruling.
A Case That Stood Out—For All the Wrong Reasons
This wasn’t just another fraud case. Prosecutors called it the largest they’d ever handled in Seattle, with around 440,000 customers allegedly scammed out of $577 million between 2015 and 2019. The DOJ claimed HashFlare lured investors with flashy, fake dashboards showing inflated mining returns, while in reality, payouts came from new victims’ money—textbook Ponzi behavior.
But here’s where things get messy. The defense argued most customers didn’t actually lose much, if anything. Nearly 390,000 of them reportedly withdrew a staggering $2.3 billion—far more than the $487 million they’d put in. And as part of their February plea deal, Potapenko and Turõgin forfeited over $400 million in assets, including Bitcoin, real estate, and even private jet trips.
Luxury Spending and a Last-Minute Deportation Scare
Prosecutors didn’t hold back in painting the pair as living large off stolen funds. Luxury cars, high-end jewelry, and those private flights were all part of the spending spree, according to the DOJ. “A mirage of cryptocurrency mining,” one official called it.
Then there was the bizarre twist just before sentencing. Despite a court order to stay in the U.S., the pair claimed they received a letter from Homeland Security telling them to “self-deport immediately.” Their lawyers called it confusing—and maybe a little suspicious—given how hard prosecutors had fought to keep them stateside.
Now, with the sentence finalized (for now), the two are heading home. Whether that’s the end of the story depends on whether the DOJ decides to appeal. Either way, it’s a strangely quiet ending for one of crypto’s biggest scams.
