tl;dr
Hydrogen Technology executives Michael Kane and Shane Hampton were sentenced to jail for manipulating the price of the HYDRO token, resulting in securities fraud. The U.S. DOJ stated that they used a South African company to manipulate the token's price on a U.S.-based crypto exchange, making $2 mil...
Hydrogen Technology executives Michael Kane and Shane Hampton were sentenced to jail for manipulating the price of the HYDRO token, resulting in securities fraud. The U.S. DOJ stated that they used a South African company to manipulate the token's price on a U.S.-based crypto exchange, making $2 million in profits.
Kane pleaded guilty to wire fraud and securities price manipulation, while Hampton was convicted of conspiracy to commit securities price manipulation and wire fraud. This case marked the first time a jury in a federal criminal trial found that a cryptocurrency was a security and that manipulating cryptocurrency prices constituted securities fraud.
CEO Michael Kane, 39, was sentenced to three years and nine months, and 32-year-old Shane Hampton, the company's head of financial engineering, was sentenced to two years and 11 months, according to DOJ statement.
The two enlisted a South African company called Moonwalkers Trading to manipulate the HYDRO price on an unidentified U.S.-based crypto exchange using a bot to place some $7 million of so-called wash trades and $300 million worth of spoof trades between October 2018 and April 2019, the DOJ said. The actions enabled them to make $2 million in profits from selling HYDRO at inflated prices.
"In this case, for the first time, a jury in a federal criminal trial found that a cryptocurrency was a security and that manipulating cryptocurrency prices was securities fraud," Nicole M. Argentieri, head of the Justice Department's Criminal Division, said in the press release.
Last year, Hydrogen Technology was fined just under $2.8 million and Kane $260,206 by the U.S. District Court of the Southern District of New York for violating securities law in a case brought by the Securities and Exchange Commission. Two other co-conspirators, Andrew Chorlian and Tyler Ostern, pleaded guilty in May 2023 to securities price manipulation and wire fraud charges and have already been sentenced, the press release said.