DHS orders HashFlare co-founding duo to leave the U.S. despite court order to stay

Hashflare co-founders, Sergei Potapenko and Ivan Turõgin claimed that they were ordered to “immediately” leave the U.S. by the Department of Homeland Security (DHS) or face law enforcement action—contradicting an earlier court order. The duo pled guilty to running a $577M crypto Ponzi scheme.

The two 40-year-old Estonian men who co-founded the now defunct crypto mining firm HashFlare pleaded guilty in a case accusing them of running a $577M cryptocurrency Ponzi scheme. They told a Washington federal judge that they each received emails from the U.S. Department of Homeland Security asking them to leave the U.S. despite being under court order to remain in the country.

The defendants also admitted to a second scheme involving a 2017 initial coin offering (ICO) for a digital bank project called Polybius, which raised $31M.

DHS orders two Ponzi scheme suspects to leave the U.S. immediately 

Potapenko and Turõgin claimed that they were both ordered through emails received on April 6 from the DHS to leave the U.S. despite the directive directly contradicting an earlier court order requiring them to remain in King County, Washington. The messages warned they would be subject to potential law enforcement actions, including potential criminal prosecution, civil fines, and penalties. 

In a letter addressed to U.S. District Judge Robert Lasnik, their lawyers disclosed that Turõgin received a second message with the same language on April 11, although the prosecution team in their case is currently working with DHS to resolve the issue by applying to DHS to extend their parole in the United States. The letter, in part, read, “although there is nothing Ivan and Sergei would want more than to immediately go home, they understood that they were also under Court order to remain in King County.”

Their lawyers also highlighted the disturbing nature of the communications, pointing out that recent news about wrongful deportations added to their clients’ fear, likely referring to a previous case where mistakenly deported Kilmar Armando Abrego Garcia was sent to serve jail time in El Salvador. 

“Immigration authorities make mistakes, and individuals who should not be in custody end up in custody, sometimes even deported to places where they should not be deported.”

-Potapenko and Turõgin attorneys

The defendants were arrested in Tallinn in November 2022 and extradited from Estonia in May 2024. They have since remained in King County, Washington, under bond conditions set by the court.

Hashflare duo plead guilty to conspiracy to commit wire fraud

In February this year, Potapenko and Turõgin pleaded guilty to conspiracy to commit wire fraud for falsely marketing cloud-based crypto mining contracts through their company HashFlare, which operated from 2015 to 2019. The defendants lacked the necessary computing power to conduct the crypto mining they promised and instead used falsified data on their platform to create the illusion of success.

The two defendants also admitted to a second scheme involving a 2017 ICO for a digital bank project, Polybius, which raised $31 million. The FBI said Turõgin and Potapenko used much of the proceeds for their own personal benefit instead of creating a digital bank. The U.S. Attorney’s Office alleged that the defendants laundered the fraud proceeds through at least 75 properties, six luxury vehicles, crypto wallets, and thousands of crypto mining machines.

The duo agreed to forfeit nearly $400 million of fraudulently acquired assets as part of the plea deal. Their lawyers also indicated in their letter that they would request a hearing requiring agency counsel to appear if the DHS issue was not resolved.

Sentencing is scheduled for May 8, and the pair face up to 20 years in prison.

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