HashFlare Founders Get Time Served in $577M Crypto Ponzi Scheme

Sergei Potapenko and Ivan Turõgin, the co-founders of HashFlare, have been sentenced to time served for their involvement in a $577 million Ponzi scheme that targeted approximately 440,000 investors between 2015 and 2019. On August 12, 2025, U.S. District Judge Robert Lasnik ruled that the pair, who had already spent 16 months in custody following their extradition from Estonia in May 2024, would not receive additional prison time. Instead, they were ordered to pay $25,000 fines each and complete 360 hours of community service. The founders will be subject to supervised release in Estonia and must forfeit over $400 million in assets as part of a plea agreement [5].

The U.S. Department of Justice (DOJ), which had sought a 10-year prison sentence, is currently evaluating the possibility of an appeal. Prosecutors described the scheme as the largest fraud case ever tried in Seattle federal court, emphasizing the scale of the deception and the lavish lifestyle of the founders. According to acting U.S. Attorney Teal Luthy Miller, the pair spent millions of dollars on personal luxuries, including real estate, luxury cars, jewelry, and private jet trips, while using funds from new investors to pay returns to earlier ones [5].

Court records show that 390,000 of the 440,000 affected investors withdrew a total of $2.3 billion from the platform, significantly reducing the net financial loss. This substantial recovery, combined with the asset forfeiture, appears to have played a key role in the judge’s decision to avoid imposing further prison time [6]. The court’s ruling has drawn mixed reactions, with some arguing that the punishment does not fully reflect the magnitude of the fraud, while others acknowledge the mitigating factors such as cooperation and financial restitution.

The sentencing also followed months of confusion regarding the defendants’ immigration status. In April 2025, a conflicting Department of Homeland Security directive ordered Potapenko and Turõgin to be deported, despite a court order requiring them to remain in the U.S. Their legal team argued that the conflicting instructions created significant uncertainty, complicating their legal and personal futures [5].

The HashFlare case highlights the growing regulatory scrutiny in the cryptocurrency industry, particularly around Ponzi schemes and fraudulent investment practices. While the founders have faced financial consequences, including the forfeiture of over $400 million, the leniency of the sentence has raised questions about how the justice system balances accountability with restitution in high-profile financial crimes [7].

Source: [1]HashFlare founders avoid extra prison time after $577M ...(https://www.cryptopolitan.com/hashflare-founders-time-ponzi-scheme/)

[2]HashFlare Founders Escape Additional Prison Time After ...(https://www.ainvest.com/news/hashflare-founders-escape-additional-prison-time-577m-crypto-scam-conviction-2508/)

[3]DOJ considers appeal of time-served sentence in $577M ...(https://crypto.news/doj-considers-appeal-of-time-served-sentence-in-577m-hashflare-ponzi/)

[4]HashFlare Co-Founders Sentenced to Time Served in ...(https://www.cryptotimes.io/2025/08/13/hashflare-co-founders-sentenced-to-time-served-in-577m-ponzi-scheme/)

[5]HashFlare Founders Get Time Served in $577M Crypto Ponzi Case (https://www.weeklyblockchain.co.kr/news/articleView.html?idxno=74448)

[6]HashFlare Founders Sentenced to Time Served in 577M ...(https://www.ainvest.com/news/hashflare-founders-sentenced-time-served-577m-crypto-ponzi-scheme-2508-64/)

[7]HashFlare Founders Avoid Further Jail Time in $577M ...(https://thecoinrise.com/hashflare-founders-avoid-further-jail-time-in-577m-ponzi-scheme-case/)