HashFlare Founders Sentenced to Time Served in 577M Crypto Ponzi Scheme

Sergei Potapenko and Ivan Turõgin, co-founders of the now-defunct cryptocurrency mining platform HashFlare, were sentenced to “time served” on August 6, 2025, after pleading guilty to orchestrating a $577 million Ponzi scheme that defrauded over 440,000 investors between 2015 and 2019 [1]. The pair had already spent 16 months in custody and will not face additional prison time. As part of the sentence, they were ordered to pay $25,000 in fines each and complete 360 hours of community service under supervised release [2].

Prosecutors had initially demanded a 10-year prison sentence, arguing that the scheme was among the largest fraud cases in the history of the U.S. District Court for Washington. The company used deceptive dashboards and exaggerated performance data to lure investors into cloud-based mining contracts that were either non-existent or poorly managed [1]. The scheme operated by funneling new investor funds to pay returns to earlier participants, a classic Ponzi structure. At its peak, the company collected $487 million in investments and returned $2.3 billion, according to court records [1].

Potapenko and Turõgin were arrested in Estonia in November 2022 and extradited to the U.S. in May 2024. During their time in custody, they were instructed to self-deport by U.S. immigration authorities, despite a court order requiring them to remain. This created legal confusion, as the co-founders had consistently stated their intent to return to Estonia [1].

A critical factor in the leniency of the sentence was a February 2025 plea deal in which the defendants agreed to forfeit over $400 million in assets, significantly mitigating the financial harm to victims. The court acknowledged the restitution and the extended period of pre-trial detention, which contributed to the decision to avoid additional incarceration [1].

Acting U.S. Attorney Teal Luthy Miller highlighted that the defendants had used illicit funds to buy luxury real estate, high-end vehicles, and jewelry, and to charter private jets for over a dozen trips [1]. The scheme reportedly generated $577 million in sales, with the founders benefiting at the expense of investors who were misled by false promises of returns on mining contracts.

The HashFlare case reflects broader concerns about the risks of unregulated digital assets and the potential for exploitation in the absence of transparency. While the court recognized the scale of the fraud, it also noted the substantial compensation already provided to victims, which likely influenced the decision to avoid further prison time. Prosecutors have indicated they may appeal the sentencing outcome [1].

The ruling highlights the growing regulatory scrutiny of cryptocurrency platforms and underscores the need for investors to conduct due diligence when engaging with digital asset projects. As the sector evolves, so too must the frameworks to ensure accountability and protect public trust.

Sources:

[1] HashFlare Founders Given Time Served For Crypto Ponzi (https://cointelegraph.com/news/hashflare-founders-given-time-served-577m-crypto-ponzi)

[2] HashFlare Founders Get Time Served in 577M Crypto ... (https://www.ainvest.com/news/hashflare-founders-time-served-577m-crypto-ponzi-scheme-case-2508/)