US prosecutors have filed an appeal against the sentences of time served handed to the co-founders of HashFlare , a defunct crypto mining service accused of running a $577 million Ponzi scheme. On Tuesday, prosecutors told a Seattle federal court that they were challenging the earlier decision by Judge Robert Lasnik, who on August 12 sentenced Sergei Potapenko and Ivan Turõgin to time served, a $25,000 fine, and 360 hours of community service. The pair will serve their supervised release in Estonia. Push for Harsher Penalties for HashFlare Co-founders Potapenko and Turõgin had already spent 16 months in custody in Estonia following their arrest in October 2022. They were extradited to the United States in May 2024 and pleaded guilty to conspiracy to commit wire fraud. The government had argued for a 10-year prison sentence, calling the HashFlare case the most significant fraud ever tried in the court and emphasizing the severe financial harm to victims. Prosecutors maintain that lenient sentencing sets a dangerous precedent in the fight against crypto crime, as insufficient punishment could embolden future offenders. Blockchain crime analysts have echoed similar concerns, warning that weak enforcement and dropped cases are fueling a culture of impunity in the digital asset sector. Dispute Over Victim Repayments HashFlare operated from 2015 to 2019, generating sales of more than $577 million. Prosecutors allege that the company misled investors with fake dashboards displaying non-existent mining capacity and fabricated returns, while payouts to earlier members came from deposits of new customers—hallmarks of a Ponzi scheme. Defense lawyers countered that despite overstating the firm’s operations, investors ultimately received crypto worth more than their initial contributions, thanks largely to rising market prices after HashFlare’s collapse. They also highlighted that over $400 million in assets had been forfeited under a February plea deal, which they claim would fully compensate victims. Prosecutors, however, argue that these claims rely on fabricated data and remain misleading. The case comes amid broader concerns about crypto fraud enforcement. Independent blockchain investigators like ZachXBT and Taylor Monahan have warned that inconsistent regulatory responses—ranging from harsh early crackdowns to today’s lighter approach—risk leaving victims without justice. Losses from crypto crime have already set a new record in the first half of 2025, surpassing levels seen in 2022. Other Ponzi operators have faced tougher penalties. In July, former rugby player Shane Donovan Moore was jailed for two and a half years for a $900,000 mining fraud, while Dwayne Golden received an eight-year sentence in June for his role in a $40 million crypto Ponzi scheme. The post US Prosecutors Appeal Sentences of HashFlare Co-Founders in $577M Ponzi Case appeared first on TheCoinrise.com .
