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 informed a Seattle federal court docket 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 have been in custody for 16 months of their native Estonia after their arrest in October 2022 and have been extradited to the US in Might 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 brought about critical hurt to victims and was probably the most important fraud the court docket had ever tried. Potapenko and Turõgin argued for time served.
On Aug. 12, Seattle Federal Courtroom Decide Robert Lasnik sentenced the pair to time served, a $25,000 nice and ordered them to finish 360 hours of neighborhood service whereas on supervised launch, which is anticipated to be served in Estonia.
Blockchain crime investigators and corporations have flagged a scarcity of great penalties and dropped enforcement actions in opposition to unhealthy actors as key drivers for crypto crime, on account of a perceived lack of penalties for prison acts.
HashFlare founders say victims have 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 have 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 in the end acquired crypto value way over their preliminary investments, primarily from the rise in crypto market costs for the reason that scheme closed.
Additionally they mentioned victims can be paid in full from the greater than $400 million value 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 have been inaccurate.
Sleuths warn lack of penalties for unhealthy actors
Blockchain investigators ZachXBT and Taylor Monahan mentioned in June that crypto court docket instances deserted by US regulators and a perceived lack of significant consequences for unhealthy actors working scams have been serving to gas crypto crime.
Specialists informed Cointelegraph final month that, in some instances, regulators have swung from overreach to underreaction, with early enforcement actions usually being harsh. There has now been a swing the opposite means, the place there may be 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 almost 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 function in a $40 million crypto Ponzi scheme operated by means of three digital asset corporations, EmpowerCoin, ECoinPlus and Jet-Coin.
Journal: ETH ‘god candle,’ $6K next? Coinbase tightens security: Hodler’s Digest, Aug. 17 – 23
