United States federal prosecutors have filed an appeal with the Ninth Circuit Court against the sentencing of HashFlare co-founders Sergei Potapenko and Ivan Turogin, requesting 10-year prison terms instead of the time-served sentences imposed by Judge Robert Lasnik on August 12, 2025. The defendants, Estonian nationals, pleaded guilty in February to conspiracy to commit wire fraud for operating a $577 million Ponzi scheme through HashFlare, a fake cloud Bitcoin mining service that attracted 440,000 global investors between 2015 and 2019 using fabricated returns on online dashboards.
Judge Lasnik sentenced Potapenko and Turogin to 16 months' imprisonment (deemed served during their extradition detention in Estonia), $25,000 fines each, and 360 hours of community service. Prosecutors argued this was insufficient given the scheme's scale, while the defense highlighted cooperation and asset forfeiture of $400–450 million (including cryptocurrency, real estate, and mining equipment) for victim restitution. Legal experts note the appeal faces challenges, as the Ninth Circuit typically defers to judges' discretion unless sentences are unreasonably lenient.