Hydrogen Technology executives Michael Kane and Shane Hampton were jailed for fraud and securities manipulation.
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, the U.S. DOJ said.
Two Hydrogen Technology executives were sentenced to jail for defrauding investors by manipulating the price of the HYDRO token, the U.S. Department of Justice said on Tuesday.
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.
Kane, from Miami Beach, pleaded guilty in November 2023 to wire fraud and committing securities price manipulation. Hampton, from Philadelphia, was convicted on Feb. 7 of conspiracy to commit securities price manipulation and wire fraud.
“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.
