HashFlare founders Sergei Potapenko and Ivan Turõgin are seeking leniency after pleading guilty to wire fraud, arguing that their actions did not cause significant losses to customers.
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Prosecutors are recommending a 10-year sentence for the duo, citing a $577 million Ponzi scheme.
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They argue that 390,000 customers withdrew $2.3 billion, exceeding their initial investments.
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Potapenko and Turõgin claim they have forfeited over $400 million in assets to repay victims.
HashFlare founders plead guilty to wire fraud, seeking leniency against a decade-long prison sentence. Read more about their case and implications for the crypto industry.
Aspect | Details | Impact |
---|---|---|
Fraud Amount | $577 million | Significant losses reported |
Customer Withdrawals | $2.3 billion | Exceeds initial investments |
What is HashFlare?
HashFlare is a crypto mining service that was accused of running a Ponzi scheme, where funds from new investors were used to pay returns to earlier investors. The founders, Sergei Potapenko and Ivan Turõgin, have pleaded guilty to wire fraud.
How did HashFlare operate?
The service sold mining contracts to customers, promising high returns. However, prosecutors claim that the returns were fabricated, and the operation was unsustainable, leading to significant financial losses for many investors.
Frequently Asked Questions
What penalties do the HashFlare founders face?
The founders are facing a recommended 10-year prison sentence for their involvement in the fraud, which caused substantial losses to investors.
How many customers were affected by HashFlare?
Approximately 440,000 customers invested in HashFlare, with claims of over $300 million in losses reported by prosecutors.
Key Takeaways
- Significant Fraud: HashFlare’s operation is considered one of the largest crypto frauds in history.
- Customer Impact: Many customers have reportedly profited despite the fraudulent nature of the service.
- Legal Implications: The case highlights the need for regulatory oversight in the crypto industry.
Conclusion
The case of HashFlare underscores the risks associated with crypto investments and the importance of due diligence. As the founders await sentencing, their actions serve as a cautionary tale for investors in the rapidly evolving crypto landscape.
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Sergei Potapenko and Ivan Turõgin have pleaded guilty to wire fraud, seeking leniency in their sentencing.
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Prosecutors are pushing for a 10-year prison sentence, citing significant losses to victims.
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The founders argue that many customers profited from their investments despite the scheme’s fraudulent nature.
HashFlare founders plead guilty to wire fraud, seeking leniency against a decade-long prison sentence. Read more about their case and implications for the crypto industry.
HashFlare didn’t cause losses, founders argue
Lawyers for Potapenko and Turõgin argued in their joint sentencing memo that despite overstating HashFlare’s mining capacity, the company’s customers ultimately received crypto worth far more than their initial investments — primarily due to the rise in crypto market prices since the scheme closed.
They argued that 390,000 customers who spent $487 million on HashFlare mining contracts have since withdrawn $2.3 billion, and claimed customers haven’t experienced as much financial hardship as the prosecutors have made out.
The duo said every potential victim will be paid in full — likely from the more than $400 million worth of assets forfeited as part of their plea deal in February.
Pair committed “horrible crime,” prosecutors say
In their sentencing submission, prosecutors focused on the sheer size and scale of HashFlare’s fraud, calling it a “horrible crime” that caused around $300 million in victim losses — with much of the proceeds used to fund Potapenko and Turõgin’s “lavish lifestyles.”
They said the pair sold $577 million worth of mining contracts to around 440,000 customers between 2015 and 2019, posting fake investor returns and paying them out with funds from newer customers.

Source: Arkham Intelligence
“HashFlare proved to be a classic Ponzi scheme,” prosecutors argued.
They added that the sentence must “reflect the seriousness of the offense,” and serve as “adequate deterrence” to protect the public from future crimes of a similar nature.
Prosecutors dismissed the idea that an Estonian court should have heard the case, noting that over 50,000 of HashFlare’s 440,000 customers were based in the US and collectively invested more than $130 million into the scheme.
HashFlare founders want to return home
Potapenko and Turõgin are still seeking deportation to their native Estonia — prompting potential implications for how US courts handle foreign nationals in cross-border crypto crime cases.
Despite a court ordering them to stay in the US, the pair said in April that they received a letter from the Department of Homeland Security directing them to “deport immediately” — causing considerable confusion over their futures.
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