US prosecutors have appealed the lenient sentences handed down to the Estonian co-founders of HashFlare, a collapsed crypto mining venture they accused of orchestrating a $577 million Ponzi scheme. The Justice Department filed an appeal with the Ninth Circuit following a Seattle federal judge’s decision earlier this month to dismiss the prospect of prison time for Sergei Potapenko and Ivan Turõgin, who pleaded guilty in May to conspiracy to commit wire fraud. Despite spending 16 months in custody in Estonia before their extradition to the US in 2024, both were sentenced to only time served, a $25,000 fine, and 360 hours of community service, which will be completed in Estonia. Prosecutors had sought ten-year prison sentences, arguing that the scheme inflicted significant financial harm on investors and was among the largest fraud cases ever seen by the Seattle court. The defense argued that victims received cryptocurrency worth more than their initial investments, citing $400 million in assets forfeited under the plea agreement to repay them. However, prosecutors challenged those claims, stating much of the supporting evidence was fabricated. The case has raised concerns about light punishments and inconsistent enforcement of financial crimes, particularly in the context of cryptocurrencies. Crypto-related investigations have highlighted that the absence of substantial consequences for fraud encourages further scams. This case comes at a time when crypto crime is on the rise, as reported losses already surpass 2022’s record and nearly equal all of 2024 by mid-year.