The legal saga surrounding the co-founders of the now-defunct cryptocurrency mining firm HashFlare has taken a dramatic turn, as the U.S. Department of Homeland Security (DHS) issued a sudden deportation order against Sergei Potapenko and Ivan Turõgin.
Despite having a legal permit to remain in the United States under a court order, the two Estonian nationals were told they must leave the country “immediately” or face law enforcement action.
The directive directly contradicts a federal court order requiring the defendants to stay in King County, Washington, where they are currently out on bond pending sentencing.
Legal representatives for the pair have flagged the conflict, warning that unless DHS retracts or clarifies its position, they will demand a formal hearing with agency officials.
Convictions Follow Massive Fraud Through Fake Mining Contracts and ICO Scheme
Potapenko and Turõgin were initially arrested in Estonia in November 2022 and extradited to the U.S. in May 2024, where they remained under strict court supervision.
In February 2025, the two pleaded guilty to conspiracy to commit wire fraud after defrauding investors through HashFlare, a cloud-based crypto mining service that operated between 2015 and 2019.
Prosecutors revealed that much of HashFlare’s mining operations were fictitious, and the contracts sold to thousands of users were essentially worthless.
Furthermore, the duo admitted to orchestrating a separate fraud in 2017, promoting a fake initial coin offering (ICO) for a digital banking project named Polybius, which raised $31 million under false pretenses.
Also Read: Russia Set To Debut Mandatory Crypto Mining Equipment Registration Agency
$400 Million in Assets to Be Forfeited Ahead of Sentencing
As part of their plea agreement, Potapenko and Turõgin have agreed to forfeit assets totaling approximately $400 million.
These include luxury real estate properties, cryptocurrency holdings, vehicles, and mining equipment, allegedly acquired through the proceeds of the fraud.
The forfeiture deal is one of the largest in a crypto-related fraud case to date and marks a significant victory for U.S. authorities attempting to clamp down on digital asset crimes.
The sentencing of both defendants is currently scheduled for August 14, 2025.
Until then, they are required to remain within King County as stipulated by the court, further deepening the legal confusion caused by the unexpected deportation notice.
Also Read: North America Faces Energy Crisis Amid Crypto Mining & AI Boom, With A 4.6% Growth Annually To 2029
Legal Teams Push Back as Deportation Threat Clouds Judicial Process
Attorneys representing Potapenko and Turõgin have raised strong objections to the DHS’s move, arguing that the deportation notice undermines the authority of the court and the integrity of the ongoing judicial process.
In a formal letter, legal counsel emphasized that removing the defendants from U.S. soil before sentencing would violate both the bond agreement and due process rights.
They further indicated their intention to request a hearing compelling DHS counsel to appear in court and justify the agency’s decision.
The clash between federal immigration enforcement and judicial oversight could set a precedent for how legal residency and court-ordered supervision intersect in complex international fraud cases.
Also Read: SEC Pauses Fraud Lawsuit Against Geosyn Crypto Mining After Federal Charges Against Executives