Sergei Potapenko and Ivan Turõgin, founders of the cloud mining service HashFlare, are requesting reduced sentences following their guilty pleas related to orchestrating a massive $577 million cryptocurrency Ponzi scheme.
After pleading guilty to wire fraud charges, the founders claim that HashFlare’s 390,000 customers collectively withdrew approximately $2.3 billion from the platform. They argue this sum significantly surpasses the $487 million customers initially invested, implying no net financial harm for many victims.
However, US prosecutors strongly contest this argument. They contend that the fraudulent scheme directly caused investor losses estimated at around $300 million. According to court documents, funds lost by investors were allegedly used to finance the founders’ extravagant lifestyles, not legitimate mining operations.
US authorities highlight that over 50,000 of HashFlare’s total customer base of 440,000 were residents of the United States. These US-based investors contributed more than $130 million to the failed operation.
In an effort to secure leniency at sentencing, Potapenko and Turõgin have surrendered and forfeited more than $400 million worth of assets seized by authorities. These assets are intended for victim restitution. Despite the forfeiture, prosecutors reportedly advocate for prison sentences nearing 10 years for each founder.