Feds Mistakenly Order Estonian HashFlare Fraudsters to Self-Deport Ahead of Sentencing

Just four months ahead of their criminal sentencing for operating a $577 million cryptocurrency mining Ponzi scheme, the two Estonian founders of HashFlare were seemingly mistakenly ordered to self-deport by the U.S. Department of Homeland Security (DHS) — an instruction that directly contradicted a court order for the men to remain in Washington state until they are sentenced in August.

In a joint letter to the court last week, lawyers for Sergei Potapenko and Ivan Turogin told District Judge Robert Lasnik of the Western District of Washington that both men had received “disturbing communications” from DHS ordering them to leave the country immediately.

“It is time for you to leave the United States,” an email to Potapenko and Turogin dated April 11 read. “DHS is terminating your parole. Do not attempt to remain in the United States – the federal government will find you. Please depart the United States immediately.”

The email, included with the letter filed last week, threatened both men with “criminal prosecution, civil fines, and penalties and any other lawful options available to the federal government” if they stayed in the country. It resembles emails that undocumented immigrants and U.S. citizens alike have received over the past few days.

Ironically, Potapenko and Turogin are not in the U.S. of their own volition — they were extradited from their native Estonia at the request of the U.S. Department of Justice in 2022 on an 18-count indictment tied to their HashFlare scheme. Though they initially pleaded not guilty to all charges, in February they both pleaded guilty to one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison, and agreed to forfeit over $400 million in assets. They have both been in the Seattle area on bond since last July.

“Although there is nothing Ivan and Sergei would want more than to immediately go home, they understood that they are also under Court order to remain in King County,” wrote Mark Bini, a partner at Reed Smith LLP and lead counsel for Potenko, wrote in the pair’s joint letter to the court. Bini did not respond to CoinDesk’s request for comment.

In his letter, Bini said DHS’s emails had caused both Potapenko and Turogin “significant anxiety.”

“We and our clients have all seen recent news. 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,” Bini wrote.

Six days after Bini’s letter to the judge, the DOJ filed its own letter with the court saying that prosecutors had coordinated with DHS’s Homeland Security Investigations (HSI) division and secured a year-long deferral to the self-deportation order.

“This should provide ample time for the sentencing to take place,” the prosecution’s letter said.

DHS did not respond to CoinDesk’s request for comment.

Potapenko and Turogin are slated to be sentenced on August 14 in Seattle. Their lawyers have said that they will request to be sentenced to time served, meaning no additional time in prison, and to be sent home to Estonia “immediately.”