Estonian Founders of HashFlare Bitcoin Mining Scam Jailed for 16 Months

Two Estonian men who orchestrated a “massive cryptocurrency Ponzi scheme” have been sentenced to 16 months behind bars, ordered to complete 360 hours of community service, and fined $25,000 each.

But prosecutors requested a 10-year prison term for Sergei Potapenko and Ivan Turõgin, who ran HashFlare. The Department of Justice said it’s examining whether to appeal the ruling.

Hashflare promised victims a share of profits from a crypto mining operation. Prosecutors said its customers were shown fictitious returns on “fake online dashboards,” and the company lacked the infrastructure to mine in the first place.

It’s claimed the pair bought Bitcoin through exchanges to reimburse early users who requested withdrawals, giving the company a sheen of legitimacy.

HashFlare’s sales exceeded $577 million between 2015 and 2019, with the duo using investor funds to buy real estate and high-end cars.

According to the U.S. Department of Justice, hundreds of thousands of people around the world fell victim to the scheme.

Investigators have managed to seize assets worth more than $450 million, which will be shared among those who lost money by investing in HashFlare.

Digital assets, real estate, vehicles and mining equipment were seized by law enforcement agencies around the world—and details of the claims process for victims “will be announced at a later date.”

Potapenko and Turõgin have been sentenced to 16 months behind bars, ordered to complete 360 hours of community service, and fined $25,000 each.

Acting U.S. Attorney Teal Luthy Miller said the pair had operated “a classic Ponzi scheme,” with victims suffering “a serious impact on their financial and emotional well-being.”

“They diverted millions of dollars to their own benefit, purchasing their own Bitcoin, real estate, luxury cars, expensive jewelry, and more than a dozen trips on chartered private jets,” she added.

Potapenko and Turõgin are going to be deported to Estonia to serve their terms of supervised release, and the FBI has set up a dedicated page on its website for anyone who believes they may be a victim of HashFlare.

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