Two Estonian nationals behind one of the largest cryptocurrency scams in U.S. history have received time served sentences after already spending 16 months in custody. The verdict, delivered by U.S. District Judge Robert Lasnik, has sparked concern among prosecutors who argue it fails to match the gravity of the fraud.
From 2015 to 2019, Sergei Potapenko and Ivan Turõgin, co-founders of HashFlare, operated what prosecutors characterized as a classic Ponzi scheme. They sold more than $577 million in crypto-mining contracts to over 440,000 investors using fake mining dashboards to simulate returns while funneling new investor funds to earlier ones.
While promotional materials showcased high-tech mining facilities and guaranteed profits, investigators allege that much of the money went toward luxury purchases, real estate, and personal investments.
Arrested in Estonia in November 2022, the pair spent 16 months in pre-extradition custody. They were extradited to the U.S. in May 2024, pleaded guilty to conspiracy to commit wire fraud in February 2025, and appeared for sentencing in August. Judge Lasnik ultimately credited the time already served and imposed no additional prison time.
Instead, both defendants received:
The U.S. Department of Justice also secured forfeiture of over $450 million in assets, including cryptocurrency, real estate, vehicles, and mining equipment, to fund potential victim compensation.
Prosecutors had recommended 10-year prison terms, arguing the scheme caused approximately $300 million in actual losses and that the sentence must serve as a deterrent. The DOJ is currently considering an appeal, citing concerns over the light sentencing given the case’s scale.
The defendants contended that many investors ultimately profited, claiming 390,000 customers who had invested $487 million withdrew more than $2.3 billion in total. Prosecutors, however, maintain that losses reached around $300 million once false profits, reinvestments, and unrecovered assets are accounted for. The true financial toll is still being assessed as authorities work through claims and asset forfeiture processes.
The HashFlare case shows how large-scale cryptocurrency fraud can last for years, cross international borders, and still leave victims waiting for justice or restitution. Even when authorities secure convictions and asset forfeiture, the path to compensating investors is often long and uncertain. Cases like this underline the importance of vigilance and early detection in avoiding potential scams.