The founders of HashFlare, a crypto mining firm behind a $577 million Ponzi scheme, have escaped further jail time after admitting to their roles within the scheme.
Sergei Potapenko and Ivan Turõgin have been in custody for 16 months, and Seattle Federal Courtroom Decide Robert Lasnik gave them time served of their sentencing hearings on Tuesday.
He additionally ordered every to pay a $25,000 effective and full 360 hours of neighborhood service whereas on supervised launch, which is anticipated to be served of their native Estonia.
The Division of Justice mentioned on Tuesday that it’s contemplating whether or not it ought to attraction the sentence as prosecutors requested for the duo to be imprisoned for 10 years, whereas Potapenko and Turõgin had requested for time served.
The pair have been arrested in Estonia in November 2022 and spent 16 months in custody earlier than being extradited to the US in Might 2024, the place they pleaded responsible to conspiracy to commit wire fraud.
Largest fraud case within the courtroom’s historical past
Seattle prosecutors mentioned it was the biggest fraud case that they had ever tried, an argument they relied on closely in pushing for the pair to get 10 years in jail.
Decide Lasnik appeared to seek out advantage in Potapenko and Turõgin’s arguments that the 440,000 clients they have been accused of ripping off didn’t undergo vital losses as they forfeited greater than $400 million price of property as a part of their plea deal in February.
The HashFlare founders additionally famous that 390,000 of these clients who spent $487 million on HashFlare mining contracts have since withdrawn $2.3 billion.
HashFlare a “traditional Ponzi,” prosecutors mentioned
Prosecutors had argued that between 2015 and 2019, HashFlare’s gross sales totaled over $577 million, posting faux dashboards that falsely reported the agency’s mining capability and the returns buyers have been making from the scheme. It paid out current members with funds from newer clients.
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“These defendants have been working a traditional Ponzi scheme, involving a glitzy asset: a mirage of cryptocurrency mining,” Appearing US Lawyer Teal Luthy Miller mentioned within the DOJ’s assertion.
“Similar to a traditional Ponzi, they diverted hundreds of thousands of {dollars} to their very own profit, buying their very own Bitcoin, actual property, luxurious automobiles, costly jewellery, and greater than a dozen journeys on chartered personal jets.”
Pair have been instructed to “self-deport” earlier than sentencing
Regardless of a courtroom ordering Potapenko and Turõgin to remain within the US, the pair mentioned in April that they acquired a letter from the Division of Homeland Safety directing them to “deport instantly” — inflicting appreciable confusion over their futures, their legal professionals mentioned on the time.
The HashFlare founders had expressed their needs to return dwelling on a number of events.
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