Shocking Twist: Hashflare Co-Founders Face Conflicting Court, DHS Orders on ‘Self-Deport’
In a bizarre turn of events, the legal fate of Hashflare co-founders Sergei Potapenko and Ivan Turogin hangs in the balance as they navigate contradictory directives from a US court and the Department of Homeland Security (DHS). Their lawyer expresses hope they might be allowed to ‘self-deport‘ to Estonia despite court orders requiring them to stay.
Hashflare Founders Caught in DHS vs. Court Conflict
The two Estonian nationals, who recently pleaded guilty to crypto fraud charges, find themselves in a legal limbo. While US District Court Judge Robert Lasnik’s bail conditions mandate they remain within Washington state, a letter from the DHS directs them to “immediately” depart the United States. This conflict creates significant anxiety for Sergei Potapenko and Ivan Turogin, as complying with one order means violating the other.
Mark Bini, defense counsel and partner at Reed Smith, highlighted the unusual situation: “I have not encountered this situation before, where you have essentially two folks in the federal government telling you conflicting things.” He noted that the defendants’ bail conditions require them to obey the law, but the DHS letter implies staying in the country is breaking the law, directly contradicting the court’s travel restrictions.
Understanding the Hashflare Crypto Fraud Case
The case against the Hashflare co-founders centers on allegations of massive crypto fraud. Between 2015 and 2019, Sergei Potapenko and Ivan Turogin are accused of defrauding users of their crypto mining service, Hashflare, out of more than $550 million. Additionally, they allegedly raised $25 million in 2017 for a purported digital bank called Polybius, which was never established.
Indicted in October 2022, the pair were arrested in Estonia and extradited to the US in May 2024. They have been free on bail since July 2024 but face potential prison sentences of up to 20 years each after pleading guilty to conspiracy to commit wire fraud.
The DHS ‘Self-Deport’ Letters Explained
The DHS letters instructing certain individuals to “depart the United States immediately” have reportedly been sent to thousands, particularly those who entered the country via the CBP One app. However, reports suggest that under the previous administration, similar letters were part of broader efforts to effect deportations, sometimes mistakenly sent to individuals with different legal statuses.
Initially, lawyer Mark Bini considered the possibility that the US government might be subtly suggesting Sergei Potapenko or Ivan Turogin could ‘self-deport‘ back to Estonia, especially following hints of changing enforcement policies in crypto cases. However, the direct conflict with the court’s explicit travel ban made this path legally complex.
Hopes for Self-Deportation After Sentencing
Despite the initial confusion, Sergei Potapenko and Ivan Turogin now carry letters from DHS confirming that action on their potential ‘self-deportation’ has been deferred for one year. This provides a layer of protection against mistaken detention and removal while they await sentencing, currently expected around August 14.
The defense team’s current strategy is to advocate for the judge to allow the co-founders to ‘self-deport‘ to Estonia after sentencing. Bini stated, “We’re going to try and convince the judge to frankly side with DHS and let them self-deport to Estonia to their families because we believe that there was no actual financial harm to the customers of Hashflare.” He noted that Potapenko, Turogin, and Hashflare have reportedly returned $400 million in crypto payments to users and agreed to forfeit assets frozen by the government in 2022. “It’s a weird [case] because for our clients, we want to be deported. Our clients are Estonian. Their families are Estonian.”
This unique situation highlights the complexities that can arise when different government branches issue conflicting orders, especially in high-profile crypto fraud cases involving foreign nationals.
Conclusion: An Unprecedented Legal Conundrum
The case of Hashflare co-founders Sergei Potapenko and Ivan Turogin presents an unprecedented legal challenge. Caught between court-ordered restrictions and a DHS directive to ‘self-deport‘, their legal team hopes the court will ultimately permit their return to Estonia after sentencing. This situation underscores the intricate legal landscape surrounding international crypto fraud cases and the unexpected conflicts that can emerge within the US justice system.
