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Crypto Execs Jailed Over HYDRO Price Manipulation

This case marks the first federal criminal trial where a cryptocurrency was deemed a security.
William M. Peaster William M. Peaster Jun 26, 20241 min read
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Crypto Execs Jailed Over HYDRO Price Manipulation

Hydrogen Technology executives Michael Kane and Shane Hampton have been sentenced to multiple years in prison for defrauding investors and manipulating the price of the HYDRO token. Kane received a sentence of three years and nine months, while Hampton was sentenced to two years and eleven months.

What's the scoop?

  • From October 2018 to April 2019, the pair manipulated HYDRO token prices using $7 million in wash trades and $300 million in spoof trades, resulting in $2 million in profits.
  • Notably, this case marks the first federal criminal trial where a cryptocurrency was deemed a security, and the price manipulation was ruled as securities fraud.
  • Co-conspirators Andrew Chorlian and Tyler Ostern also previously pleaded guilty to related charges and were sentenced in 2023.
  • In a separate case last year, Hydrogen Technology and Kane were fined $2.8 million and $260,206 respectively by the SEC for securities law violations. 

Bankless take:

The sentencing of Kane and Hampton shows that U.S. regulatory bodies are actively pursuing clear-cut cases of fraud in the crypto space. Tokens at the center of manipulative practices that walk and talk like securities will be prime targets for enforcement actions. The crypto community should take note of this precedent as it likely foreshadows increased regulatory scrutiny on similar projects.

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William M. Peaster

Written by William M. Peaster

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William M. Peaster, Senior Writer, has been with Bankless since January 2021. Immersed in Ethereum since 2017, he writes the Metaversal newsletter on the onchain frontier, covering everything from AI projects to crypto games, as the team’s lead NFT analyst. With a background in creative writing, he writes fiction and publishes art on Ethereum in his free time. He lives in Washington.

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