Sergei Potapenko and Ivan Turõgin, the founders of collapsed mining company HashFlare, pleaded guilty to wire fraud after being extradited to the U.S. earlier this year. In a recent filing, they argued that further prison time would be excessive, citing their 16-month detention in Estonia and their cooperation with U.S. authorities.
But prosecutors strongly disagreed. In their own memo, they described the fraud as the largest ever seen by the court, with at least $300 million in losses and nearly half a million victims globally — including over 50,000 in the U.S. who contributed $130 million. They called HashFlare a “classic Ponzi scheme,” where funds from new investors were used to pay off earlier ones.
The defendants claim customers weren’t left in the red. Thanks to rising crypto prices, they argue most users ultimately withdrew more than they invested — $2.3 billion compared to $487 million in contributions. They also pointed to over $400 million in assets now earmarked for restitution.
Still, prosecutors maintain that the scale of the fraud, and the lifestyle it financed, warrants a full 10-year sentence. They say anything less would undermine the seriousness of the crime and fail to deter future crypto fraud.
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