US prosecutors appealed the sentences of time served given to the co-founders of HashFlare, a crypto mining service and $577 million Ponzi scheme.
Prosecutors instructed a Seattle federal courtroom on Tuesday that the federal government was interesting the sentences handed down earlier this month to Sergei Potapenko and Ivan Turõgin to the Ninth Circuit.
Potapenko and Turõgin had been in custody for 16 months of their native Estonia after their arrest in October 2022 and had been extradited to the US in Could 2024, the place they pleaded guilty to conspiracy to commit wire fraud.
The federal government had argued that the pair ought to get 10 years in jail, saying that the HashFlare scheme induced severe hurt to victims and was essentially the most important fraud the courtroom had ever tried. Potapenko and Turõgin argued for time served.
On Aug. 12, Seattle Federal Court docket Decide Robert Lasnik sentenced the pair to time served, a $25,000 nice and ordered them to finish 360 hours of group service whereas on supervised launch, which is predicted to be served in Estonia.
Blockchain crime investigators and corporations have flagged a scarcity of serious penalties and dropped enforcement actions in opposition to dangerous actors as key drivers for crypto crime, on account of a perceived lack of penalties for felony acts.
HashFlare founders say victims had been repaid
Prosecutors mentioned that between 2015 and 2019, HashFlare’s gross sales totaled over $577 million, and the co-founders posted faux dashboards that falsely reported the agency’s mining capability and the returns traders had been making.
Present members were paid out with funds from newer clients, which the federal government mentioned “proved to be a basic Ponzi scheme.”
Legal professionals for Potapenko and Turõgin argued that regardless of overstating HashFlare’s mining capacity, the corporate’s clients finally obtained crypto price excess of their preliminary investments, primarily from the rise in crypto market costs for the reason that scheme closed.
In addition they mentioned victims can be paid in full from the greater than $400 million price of belongings forfeited as a part of Potapenko and Turõgin’s plea deal in February. Nonetheless, prosectors alleged that the data was fabricated, and these arguments had been inaccurate.
Sleuths warn lack of penalties for dangerous actors
Blockchain investigators ZachXBT and Taylor Monahan mentioned in June that crypto courtroom circumstances deserted by US regulators and a perceived lack of significant consequences for dangerous actors working scams had been serving to gasoline crypto crime.
Consultants instructed Cointelegraph final month that, in some circumstances, regulators have swung from overreach to underreaction, with early enforcement actions usually being harsh. There has now been a swing the opposite manner, the place there’s little accountability.
Associated: Key player in $13M crypto Ponzi scheme pleads guilty
Crypto crime losses hit a brand new report within the first half of 2025, beating the earlier report set in 2022 and practically equal to the total losses from all of 2024.
Different Ponzi operators have been jailed
Former rugby participant Shane Donovan Moore was sentenced to two-and-a-half years behind bars in July for defrauding more than 40 investors out of $900,000 in a crypto mining Ponzi scheme.
In the meantime, Dwayne Golden was convicted of wire fraud and cash laundering and sentenced to eight years in June for his position in a $40 million crypto Ponzi scheme operated by way of three digital asset companies, EmpowerCoin, ECoinPlus and Jet-Coin.
Journal: ETH ‘god candle,’ $6K next? Coinbase tightens security: Hodler’s Digest, Aug. 17 – 23
