U.S. prosecutors seek 10-year sentences for HashFlare co-founders in $400M crypto fraud case

U.S. prosecutors have reaffirmed their recommendation for a 10-year prison sentence for Sergei Potapenko and Ivan Turogin, the Estonian co-founders of the cryptocurrency mining platform HashFlare. The two men, who pleaded guilty in February to conspiracy to commit wire fraud, are set to be sentenced later this week [1]. In a recent filing, federal prosecutors dismissed the defense’s argument that no real harm was caused to investors. They emphasized that victims endured tangible losses through what they described as a “fraud, a Ponzi scheme” [1].

The defense had requested a sentence based on time served, citing that HashFlare returned $400 million in cryptocurrency to users and agreed to forfeit frozen assets. However, prosecutors countered that the defense's reliance on an expert opinion regarding unrealized investor gains is flawed. These claims, the filing stated, are based on fabricated data as admitted by the defendants in their guilty pleas [1].

Potapenko and Turogin were arrested in Estonia in October 2022 and extradited to the U.S. in May 2024. Both have been under bond since July 2024 and have not been subject to deportation proceedings, though they reportedly received notices urging them to “self-deport” [1]. It remains unclear whether the judge will take their immigration status into account during sentencing.

The government’s stance signals a broader trend in the U.S. justice system, where digital asset-related fraud is increasingly treated with the same gravity as traditional financial crimes. The sentencing outcome may set a precedent for future enforcement actions within the crypto industry [1].

Source: [1] Fiscales estadounidenses reafirman sentencia de 10 años ... (https://es.cointelegraph.com/news/us-prosecutors-hashflare-co-founders-sentencing-recommendation)