Two Estonian citizens avoided additional sentences to adjust one of the largest Ponzi schemes (hash flares) in the code after receiving sentences matching the 16 months they were already in detention.
Sergei Potapenko and 40-year-old Ivan Targin were declared by US District Judge Robert S. Lasnik in the role of a $577 million hash flare fraud that cost hundreds of thousands of investors around the world between 2015 and 2019.
US District Judge Robert S. Lasnik ordered each defendant to pay $25,000 in fines to complete 360 hours of community service during the supervised release in Estonia.
The ruling included the confiscation of more than $450 million in seized assets to compensate the victim, but prosecutors are seeking a 10-year sentence and are considering appeals.
$577 million mining mirage
Hashflare has acquired the status as a sales agreement for crypto mining services, where customers promise to share profits from blockchain verification activities. Court documents revealed that operations using fake online dashboards indicating false mining activities lack the computing ability to mine most of the alleged cryptocurrency.
According to an official press release from the Department of Justice, the duo’s equipment performed Bitcoin mining with less than 1% of their computing power.
When investors requested a withdrawal, Potapenko and Tagen resisted payments or used newly purchased cryptocurrency, rather than actual mining rewards.
The defendant diverted millions to buy real estate, luxury cars, expensive gems and dozens of chartered private jet trips while the victim suffered major losses.
Their scheme has been extended beyond Hashflare to include Polybius Bank, a fictional “cryptocurrency bank” that raised $25 million through the 2017 ICO but is not operated as an actual financial institution.
The 2023 arrest led to complicated extradition procedures before Estonia approved the relocation in early 2024 to face US accusations.
Both men pleaded guilty In February, a conspiracy to commit fraudagrees to confiscate more than $400 million in assets while facing a maximum of 20 years in prison.
Two Estonians pleaded guilty in the United States to running a massive, multifaceted cryptographic ponge scheme that cost hundreds of thousands of people worldwide.#crypto #cryptoscam #scamhttps://t.co/86bnjd3fj9
– cryptonews.com (@cryptones) February 14, 2025
“These defendants ran a classic Ponzi scheme that included flashy assets: the mirage of cryptocurrency mining.” He played lawyer Teal Lucy Miller.
Gentle sentences go against a new pattern of strict code penalties
Hashhura’s 16-month sentence appears to contradict the judicial intensification towards severe punishment for cryptocurrency crimes, regardless of the size or complexity of the scheme.
Nicholas Turglia’s sentence, for example, jumped from 18 months to 12 years on a $22 million SIM swapping scheme after failing to pay compensation, with the judge denounced his “greatness” lifestyle while holding millions of liability to the victims.
Similarly, former rugby player Shane Moore was sentenced to 30 months in a $900,000 mining fraud and received nearly twice the custody of Hashflare defendant on a scheme of less than 0.2% of the business.
The inequality in judgment is more pronounced when compared to non-cryptic financial fraud cases. Defendants will typically receive years of sentences for schemes that contain far less than Hashfair’s $500,000 operation.
Mohammed Azharuddin Chhipa received 30 years for concentrating $185,000 in cryptocurrency on ISIS operatives.
This contrast extends beyond specific cases to the prosecutor’s approach, with Dwayne Golden receiving eight years on a $40 million Ponzi scheme, and prosecutors recruiting former Celsius CEO Alex Masski for 20 years in a $550 million fraud case.
Celsius founder Alex Masski was sentenced to 12 years in prison for deceiving investors with the false promise of advanced crypto returns.#Celsius #Alexmashinskyhttps://t.co/r4syydikau
– cryptonews.com (@cryptones) May 9, 2025
Legal experts question whether the defendant’s cooperation, property confiscation, or other private factors have affected the unusually generous outcome of such large-scale international fraud.
However, the Department of Justice’s consideration of appeals, while facing high legal hurdles and uncertain consequences for criminal punishment appeals, suggests an internal discrepancy to criminal proportions.
The founder of Hashflare Ponzi provided time with a $577 million crypto scheme, and added prisons first appeared on Cryptonews.
