HashFlare Co-Founders Facing Sentencing for Wire Fraud Conspiracy
Two Estonian nationals who co-founded the cryptocurrency mining service HashFlare are set to be sentenced on Thursday after pleading guilty to conspiracy to commit wire fraud as part of a plea deal with prosecutors.
In a recent filing, US prosecutors challenged the claims made by lawyers for HashFlare co-founders Sergei Potapenko and Ivan Turogin in their sentencing recommendation.
Potapenko and Turogin requested time served, while the US government’s lawyers are seeking a sentence of 10 years in prison, citing the real harm suffered by HashFlare’s victims.
The prosecutors stated, “[…] Defendants argue HashFlare’s victims suffered no loss based in part on [an expert opinion] and in part on meager attempts to discredit their victims’ statements. However, the expert opinion is based substantially on supposed HashFlare investor earnings – data that Defendants admitted in their plea agreements was fabricated.”
Supplement for the US government’s sentencing recommendation for Sergei Potapenko and Ivan Turogin. Source: US District Court for the Western District of Washington at Seattle
The co-founders of HashFlare claimed in previous court filings that users did not suffer significant losses after returning $400 million in cryptocurrency to users and agreeing to forfeit interests in assets frozen by the US government in 2022. Prosecutors rebutted these claims, stating that HashFlare operated as a “fraud, a Ponzi Scheme.”
Indicted in October 2022, Potapenko and Turogin were extradited to the US in May 2024 after being arrested and held in Estonia. They have been out on bail since July 2024 and pleaded guilty to conspiracy to commit wire fraud in February.
Orders to “self-deport” before sentencing?
During court proceedings, the HashFlare co-founders received letters from the US Department of Homeland Security instructing them to “leave the United States” as part of a deportation initiative under the Trump administration. It remains to be seen if the judge will take their immigration status into consideration during sentencing.
Cointelegraph reached out to Potapenko’s counsel for comment on the sentencing hearing but had not received a response at the time of publication.