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.
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.
Don't Miss a Beat – Subscribe to get email alerts delivered directly to your inboxGenerated Image: Midjourney