U.S. Prosecutors Push 10-Year Sentences for HashFlare Co-Founders in Fraud Case

U.S. prosecutors have maintained their call for a 10-year prison sentence for the co-founders of HashFlare, Sergei Potapenko and Ivan Turogin, following their guilty plea to conspiracy to commit wire fraud. The pair, arrested in Estonia in May 2024 and extradited to the U.S., have been free on bail since July of the same year. In a recent filing, prosecutors rejected the defense’s request for time served, arguing that the victims of HashFlare’s alleged fraudulent scheme suffered real and substantial harm [1].

The prosecution emphasized that the co-founders’ claims—namely, that $400 million in crypto had been returned to users and that losses were minimal—are misleading. Prosecutors stated that these arguments were based on fabricated data admitted by the defendants themselves in their plea agreements. The defense, in contrast, cited an expert opinion suggesting that users had not incurred significant losses, but prosecutors dismissed this as part of a broader effort to undermine victim statements [1].

HashFlare, a cloud-based mining service, had promised investors returns through Bitcoin and other cryptocurrencies. However, the U.S. Department of Justice has characterized the company’s operations as a Ponzi scheme, wherein early investors were paid with funds from later participants. The co-founders were indicted in October 2022 and pleaded guilty in February 2025. Their sentencing hearing is set for Thursday, with the government urging a 10-year prison term as part of its broader efforts to hold crypto industry actors accountable for fraudulent behavior [1].

The case is part of a growing trend in U.S. enforcement actions targeting crypto-related fraud. Recent high-profile cases, such as those involving Terraform Labs founder Do Kwon and Tornado Cash co-founder Roman Storm, have seen similarly severe sentencing recommendations. Prosecutors are using these cases to signal a firm stance against deceptive practices in the fast-moving and often opaque digital asset sector. The HashFlare case, in particular, reflects the government’s commitment to enforcing the law and protecting investors in an industry still struggling with transparency and trust [1].

In a separate but related development, both Potapenko and Turogin received a letter from U.S. Immigration and Customs Enforcement urging them to “leave the United States.” The move has been attributed to the Trump administration’s broader immigration policies and raises questions about whether the judge will consider their immigration status during sentencing. However, no official indication has been provided that this will influence the court’s decision [1].

The final outcome of the sentencing will be determined by a federal judge, with the prosecution’s 10-year recommendation serving as a key factor. If upheld, the sentence would reinforce the message that fraudulent activities in the crypto space can result in severe legal consequences. The case is another step in the ongoing evolution of the regulatory landscape, which continues to shape the trajectory of the global digital asset market [1].

Source: [1] US Prosecutors Double Down On 10-Year Sentence For HashFlare Co-Founders (https://cointelegraph.com/news/us-prosecutors-hashflare-co-founders-sentencing-recommendation)