Two executives of fintech company Hydrogen Technology have received prison time for their role in inflating the firm’s cryptocurrency, HYDRO.
In a statement, the U.S. Department of Justice (DOJ) says that Hydrogen Technology co-founder and CEO Michael Kane of Miami Beach, Florida and Head of Financial Engineering Shane Hampton of Philadelphia, Pennsylvania were sentenced for orchestrating cryptocurrency securities fraud and wire fraud schemes.
[adinserter block="1"]The two men are accused of hiring South African software assisted market making firm Moonwalkers Trading Limited to inflate the price of HYDRO on a US-based crypto exchange using a trading bot that flooded the market with fake and fraudulent orders between October 2018 and April 2019.
The duo and their conspirators then executed approximately $7 million in wash trades and $300 million in spoof trades through the bot and eventually profited approximately $2 million from selling HYDRO.
The DOJ says the case is the first criminal jury trial that found cryptocurrency to be a security and manipulating cryptocurrency prices is a securities fraud.
“The jury unanimously found that the defendants’ sales of HYDRO constituted investment contracts, making the token a security under federal securities law. Hampton’s case was the first criminal jury trial in which a cryptocurrency was found to be a security.”
Kane was sentenced to a jail time of three years and nine months while Hampton will spend two years and 11 months behind bars.
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