U.S. Federal Prosecutor Appeals to Increase Sentence of HashFlare Mining Fraud Case Mastermind

On August 27th, as per the report in Decrypt, the U.S. federal prosecutors have appealed to the Ninth Circuit Court of Appeals in an attempt to secure an increase in the "time served" sentence for Estonian citizens Sergei Potapenko and Ivan Turõgin in the $577 million HashFlare cryptocurrency Ponzi scheme case. The federal prosecutors have characterized the original sentence as "unusually lenient." These two individuals had previously pleaded guilty to conspiracy. They defrauded 440,000 global victims between 2015 and 2019 by means of false mining contracts, presenting a fabricated "dashboard" of returns, and using the funds to purchase luxury goods and pay early withdrawers. Previously, the judge sentenced them to three years of supervised release and a $25,000 fine each. The judge rejected the prosecutor's request for a 10-year prison term, citing concerns regarding the treatment of foreign defendants in the U.S., including the possibility of "indefinite detention." Legal experts assert that the judge's reasoning based on "time served, immigration risk, and restitution concerns" is sufficient. The Ninth Circuit Court of Appeals generally respects the trial judge's discretion, making a likelihood of an upheld ruling. However, the lenient sentence may potentially weaken the deterrence effect of economic crimes. The case has managed to seize $400 million for victim compensation and is regarded as the "largest fraud case in the Western District of Washington."