2024

April

The crypto industry woke up to the US Department of Justice sentencing two individuals for their roles in a scheme to manipulate and defraud investors. The alleged culprits exploited the price of Hydrogen Technology’s cryptocurrency, HYDRO. DOJ drops big convictions 
The release suggests that the case marks the first time a <a href="https://news.todayq.com/is-tornado-cash-a-criminal-tool-coinbase-legal-chief-speaks-out/" rel="noopener noreferrer nofollow">federal criminal trial</a> has intent that crypto constitutes a security.
Principal Deputy Assistant Attorney General Nicole M. Argentieri announced the sentences. As reported Shane Hampton received a sentence of two years and eleven months in prison. His co-conspirator, Michael Kane is sentenced to three years and nine months.&nbsp;
Argentieri stated that Shane Hampton, Michael Kane, and their co-conspirators defrauded investors by using a trading bot to manipulate the price of their company’s cryptocurrency.” He added, “This prosecution and the sentences imposed today should serve as a warning: The Criminal Division will not hesitate to use all tools at its disposal. This includes the federal securities laws to protect the integrity of cryptocurrency markets.”
Court documents and trial evidence revealed that the co-founder and CEO of Hydrogen Technology, and the Head of Financial Engineering, was involved in Moonwalkers Trading Limited of South Africa. It was done to artificially inflate the price of HYDRO on a US based crypto exchange.&nbsp;
From October 2018 to April 2019, they employed an automated trading application, or “bot,” to execute fraudulent orders, the report mentioned. How did they do it? 
The manipulation involved approx $7 million in “wash trades” and over $300 million in “spoof trades.” These practices successfully induced retail investors to buy HYDRO at inflated prices. It resulted in $2 million in profits for the conspirators over ten months.
Kane pleaded guilty in November 2023 to charges including conspiracy to commit securities price manipulation, conspiracy to commit wire fraud, and two counts of wire fraud.&nbsp;
Hampton was convicted by a federal jury in February 2024 of conspiracy to commit securities price manipulation and conspiracy to commit wire fraud. The jury’s unanimous verdict affirmed that HYDRO sales constituted investment contracts, thereby classifying the token as a security under federal law.
This case is notable as Hampton’s trial was the first criminal jury trial to conclude that crypto is a security. The ruling may influence future regulatory and enforcement actions in the digital asset space.
Two additional co-conspirators, Andrew Chorlian and Tyler Ostern, pleaded guilty in May 2023 to conspiracy to commit securities price manipulation and wire fraud. Both have already been sentenced.

First Crypto security case, DOJ issues prison sentences

Todayq News

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