Conflicting Orders: Hashflare Founders Caught Between U.S. Court and DHS Deportation Notice
Crypto Fraud Case Collides with Immigration Bureaucracy as Estonian Nationals Face Legal Confusion
Two Estonian nationals at the center of a $550 million crypto fraud case are caught in a legal tug-of-war between the U.S. Justice Department and the Department of Homeland Security (DHS), raising questions about how justice and immigration enforcement intersect in crypto-related crimes.
Sergei Potapenko and Ivan Turogin, co-founders of now-defunct crypto mining platform Hashflare, pleaded guilty in February to wire fraud conspiracy, admitting to orchestrating a massive scheme that defrauded users and investors between 2015 and 2019. Now, just months before their scheduled sentencing, they’ve received an unexpected directive: “Self-deport immediately,” per DHS orders.
But there’s a catch—they’re not allowed to leave.
Told to Leave, Forced to Stay: A Legal Paradox
Bail Conditions and DHS Orders Clash
While the DHS letter instructs them to depart the U.S. immediately, their bail conditions—set by Judge Robert Lasnik—prohibit them from leaving the Seattle area. The legal contradiction has sparked confusion, even for the defense.
“It caused some angst,” said Mark Bini, defense attorney and partner at Reed Smith. “If they stay, they’re breaking the law. If they leave, they’re breaking the law.”
Potapenko and Turogin now carry documentation confirming DHS has deferred deportation action for one year, in case federal agents mistakenly try to remove them before their August 14 sentencing. Both men could face up to 20 years in prison for their roles in the fraudulent operations of Hashflare and the fake Polybius digital bank project, which raised an additional $25 million from investors in 2017 but was never launched.
Crypto, Crime, and Immigration: A Complex Intersection
A Rare Case with Unusual Legal Dynamics
The Hashflare saga began in Estonia, where the pair were arrested in late 2022 and extradited to the U.S. in May 2024. Since July 2024, they’ve been out on bail but under tight restrictions. The sudden deportation directive from DHS, part of a broader push for immigration enforcement, has complicated what was already a high-profile case in the crypto space.
Bini speculates the DHS letters may stem from policy shifts under the Trump administration, noting that even some U.S. citizens reportedly received similar notices through the CBP One app. He’s now pushing for the court to allow voluntary return to Estonia, arguing that:
“There was no actual financial harm to Hashflare customers. Our clients are Estonian. Their families are in Estonia. We’re essentially asking the court to side with DHS and allow them to go home.”
Restitution, Not Resistance: $400M Returned to Users
Defense Highlights Cooperative Efforts
Despite the scale of the fraud, Potapenko and Turogin have cooperated with U.S. authorities to return $400 million in cryptocurrency to affected users. Additionally, they’ve agreed to forfeit assets frozen by the government in 2022. Their legal team is using this cooperation as part of a plea for leniency—and possibly a chance to leave the U.S. before sentencing.
This case underscores the evolving complexity at the intersection of crypto law enforcement and immigration policy, with international actors, digital assets, and contradictory federal agencies all in play.
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