Sergei Potapenko and Ivan Turõgin, the duo behind the crypto mining firm HashFlare, have been released from custody after already serving 16 months.
A US court decided not to extend their time behind bars, even though they admitted to helping run a large-scale investment fraud scheme.
During a sentencing hearing in Seattle, Judge Robert Lasnik ruled that their time spent in detention since their arrest was sufficient. Instead of more prison time, both were fined $25,000 and assigned 360 hours of community work, which they are expected to complete while under supervision in Estonia.
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The US Department of Justice, which had requested a 10-year sentence, said it may challenge the outcome. Prosecutors described the case as the largest fraud they had ever prosecuted in the region.
HashFlare was accused of misleading hundreds of thousands of people into buying crypto mining contracts between 2015 and 2019. Customers were shown dashboards that overstated mining results, while newer investors’ money was used to pay earlier ones, which fit the pattern of a Ponzi scheme.
According to prosecutors, the scheme brought in over $577 million, and large portions of that money were spent on personal purchases. These included buying real estate, luxury items, private flights, and Bitcoin
Acting US Attorney Teal Luthy Miller called it a textbook Ponzi setup, with cryptocurrency as the bait.
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