According to a statement released by the U.S. Department of Justice on Tuesday, two executives from Hydrogen Technology received prison sentences for deceiving investors by tampering with the price of the HYDRO token. The DOJ said that the company’s head of financial engineering, Shane Hampton, 32, received a sentence of two years and eleven months, while CEO Michael Kane, 39, received a sentence of three years and nine months. According to the DOJ, the two hired Moonwalkers Trading, a South African company, to use a bot to place about $300 million in fake trades and $7 million in so-called wash trades between October 2018 and April 2019 on an unnamed cryptocurrency exchange in the United States.
They were able to profit $2 million by selling HYDRO at inflated rates thanks to their efforts. In November 2023, Miami Beach resident Kane entered a guilty plea to charges of wire fraud and securities price manipulation. On February 7, Hampton, a resident of Philadelphia, was found guilty of conspiring to commit wire fraud and securities price manipulation.
Nicole M. Argentieri, the chief of the Justice Department’s Criminal Division, stated in the press release that “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.”
The Securities and Exchange Commission filed a lawsuit against Hydrogen Technology last year, and the U.S. District Court of the Southern District of New York penalised the company just under $2.8 million and Kane $260,206 for breaking securities legislation. The press statement stated that two further co-conspirators, Andrew Chorlian and Tyler Ostern, have already been sentenced after entering guilty pleas to counts of wire fraud and securities price manipulation in May 2023.