The U.S. prosecution has appealed the sentencing of HashFlare, a cryptocurrency mining service, and its two co-founders involved in a $577 million Ponzi scheme, arguing that their time served should be considered as part of their sentence.
On Tuesday, the prosecution stated in a federal court in Seattle that the government filed an appeal with the Ninth Circuit Court of Appeals regarding the judgment against Sergei Potapenko and Ivan Turõgin earlier this month.
Potapenko and Turõgin were arrested in Estonia in October 2022 and were subsequently detained for 16 months. They were extradited to the U.S. in May 2024, where they pleaded guilty to conspiracy to commit wire fraud.
The government believes that the two should be sentenced to 10 years in prison, noting that the HashFlare case caused significant harm to victims and is the most serious fraud case the court has handled to date. Potapenko and Turõgin argue that their time served should count as their sentence and request closure of the case.
On August 12, U.S. District Judge Robert Lasnik ruled that the two would receive a sentence equal to their time served and imposed a $25,000 fine. Additionally, they were required to complete 360 hours of community service during their supervised release, which is expected to be carried out in Estonia.
Blockchain crime investigators and companies have pointed out that the lack of significant consequences for criminal behavior and reduced law enforcement actions are key drivers of cryptocurrency crime.
The prosecution stated that between 2015 and 2019, HashFlare had total sales exceeding $577 million, and the two co-founders presented false data display interfaces, misreporting the company's mining capacity and investor returns.
The government noted that the earnings of existing members actually came from the funds of new customers, "proving to be a typical Ponzi scheme."
Potapenko and Turõgin's lawyers argued that although HashFlare's mining capacity was overestimated, the value of the cryptocurrency that company customers ultimately received far exceeded their initial investments due to a significant rise in crypto market prices after the project's closure.
The lawyers also stated that victims would receive full compensation from the over $400 million in assets forfeited under Potapenko and Turõgin's plea agreement in February of this year. The prosecution, however, claimed that the relevant data was fabricated, denying the accuracy of the aforementioned statement.
Blockchain investigators ZachXBT and Taylor Monahan stated in June that the withdrawal of cryptocurrency cases by U.S. regulators and insufficient punishment for wrongdoers are fueling crypto crime.
Experts told Cointelegraph last month that in some cases, regulators have shifted from over-enforcement to under-response, with early enforcement often being severe, while it has gradually become more lenient, leading to reduced accountability.
In the first half of 2025, losses from cryptocurrency crime reached a new high, surpassing the record set in 2022, nearly equaling the total losses for all of 2024.
Former football player Shane Donovan Moore was sentenced to two and a half years in prison in July for participating in a cryptocurrency mining Ponzi scheme that defrauded over 40 investors of a total of $900,000.
Dwayne Golden was sentenced to eight years in prison in June for operating a $40 million crypto Ponzi scheme through three digital asset companies: EmpowerCoin, ECoinPlus, and Jet-Coin, after being found guilty of wire fraud and money laundering.
Related: If three key factors are met, Solana (SOL) is expected to rise to $250.
Original: “U.S. Prosecution Appeals Sentencing of HashFlare Ponzi Scheme Perpetrators”
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