Cryptocurrency price manipulation and securities fraud led to two jail sentences

Two males have been sentenced for manipulating the value of Hydrogen Expertise’s cryptocurrency HYDRO and conspiring to defraud buyers.

The case marks the primary time a jury in a federal felony trial has categorised cryptocurrencies as securities and located that cryptocurrency value manipulation constituted securities fraud.

$300 Million HYDRO Cryptocurrency Fraud Scheme

Courtroom paperwork and trial proof disclose Kane, co-founder and CEO of Hydrogen Expertise, and Hampton, the corporate’s head of economic engineering, rent South Africa’s Moonwalkers Buying and selling Restricted manipulate HYDRO PRICE. From October 2018 to April 2019, the corporate used automated buying and selling bots to create false and fraudulent orders on a U.S.-based cryptocurrency change.

Kane, Hampton and their co-conspirators performed roughly $7 million in “cash laundering transactions” and greater than $300 million in “misleading transactions” for HYDRO. These transactions misled retail buyers into buying HYDRO at artificially inflated costs, ensuing within the conspirators making roughly $2 million in earnings over a 10-month interval.

“Shane Hampton, Michael Kane, and their co-conspirators used buying and selling bots to control the value of their firms’ cryptocurrencies and defrauded buyers,” stated Legal professional Normal in Cost of the Justice Division’s Prison Division stated Chief Deputy Assistant Nicole M. Argentieri.

Worth manipulation and securities fraud

Kane pleaded responsible in November 2023 to at least one depend of conspiracy to commit securities value manipulation, one depend of conspiracy to commit wire fraud and two counts of wire fraud. On February 7, a federal jury convicted Hampton of 1 depend of conspiracy to commit securities value manipulation and one depend of conspiracy to commit wire fraud.

The jury unanimously agreed Decide The HYDRO offered by Defendants was an funding contract, thus classifying the tokens as securities below the federal securities legal guidelines. The trial is the primary felony jury trial to think about cryptocurrencies as securities.

Two different co-conspirators, Andrew Chorlian and Tyler Ostern, pleaded responsible in Might 2023 to at least one depend of conspiracy to control securities costs and wire fraud. Each males had beforehand been sentenced.

Shane Hampton, 32, of Philadelphia, was sentenced to 2 years and 11 months in jail. His co-conspirator, Michael Kane, 39, of Miami Seashore, Florida, was sentenced to a few years and 9 months in jail.