HashFlare Founders Skirt Justice—No Extra Prison Time in Cloud Mining Scandal

Another day, another crypto courtroom drama ends with a slap on the wrist.

The brains behind HashFlare—the cloud mining operation that evaporated faster than a shitcoin in a bear market—just dodged extended jail time. No surprise here: the justice system moves slower than Bitcoin transactions during the 2017 bull run.

These guys allegedly turned ‘hashrate’ into ‘cash-grab’ so effectively they’d make Wall Street bankers blush. Yet here we are—proving once again that in crypto, the house always wins (even when it’s a fraudulent one).

Miller says victims were hurt financially and emotionally

Acting U.S. Attorney Teal Miller said “the vast majority” of victims in this case suffered losses that impacted them both financially and emotionally. The Ponzi scheme hurt unsuspecting customers who bought “a mirage of cryptocurrency mining” involving a non-existent “glitzy asset.” Miller felt it was wrong that the two used these millions of dollars to buy their own crypto, hire private jets, buy expensive jewelry, luxury cars, and real estate while their victims suffered.

However, Judge Lasnik seemed to agree with Potapenko and Turõgin’s argument that the 440K customers did not suffer significant losses. The two also noted that about 390K of the customers who had bought nearly $487 million worth of HashFlare mining contracts had withdrawn roughly $2.3 billion. Turõgin’s attorney, Andery Spektor, claimed that no customer had suffered any harm, but acknowledged that HashFlare may have lied about the amount of crypto it mined.     

“These defendants were operating a classic Ponzi scheme … And just like a classic Ponzi, they diverted millions of dollars to their own benefit … Meanwhile, the vast majority of their victims suffered losses — in many cases, losses that had a serious impact on their financial and emotional well-being.”

–Teal Miller, Acting U.S. Attorney

The initial indictment asserted that the two had swindled HashFlare customers using false information about its mining capacity. The company allegedly mined less than 1% of what it claimed but stole more than $550 million from customers between 2015 and 2019. HashFlare also raised around $25 million from investors in 2017 under the guise of opening the Polybus digital bank.

Bini claims ‘zero financial harm’ to anyone

Defense counsel and partner at Reed Smith, Mark Bini, claimed that Potapenko and Turõgin were committed to ensuring “zero financial harm” to anyone. According to Bini, HashFlare returned over $350 million in crypto payments to victims between 2022 and 2025. 

However, prosecutors argued that the harm suffered by HashFlare victims could not be more real. The prosecutors also argued that the defendants had admitted that the data they had provided to discredit their victims’ claims was fabricated. They added that the expert opinion presented as evidence for the defense was substantially based on HashFlare investor earnings, not victim losses. 

The defendants repeatedly claimed in previous court filings that HashFlare customers did not suffer significant losses since $400 million worth of crypto had already been paid back to them. However, the prosecutors argued that this assumption was wrong. The forfeited assets will be available to compensate the victims at a later date, which has not yet been confirmed. 

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