- First federal case where crypto manipulation is deemed securities fraud.
- HYDRO cryptocurrency manipulation by Shane Hampton and Michael Kane.
- Hampton and Kane sentenced for their roles in the scheme.
- Jury found HYDRO to be a security under federal law.
In a groundbreaking federal case, a jury has delivered a verdict that marks a significant milestone in the regulation of cryptocurrencies. Shane Hampton and Michael Kane have been sentenced for their roles in manipulating the price of Hydrogen Technology’s cryptocurrency, HYDRO, and defrauding investors, marking the first instance of a jury in a federal criminal trial declaring a cryptocurrency as a security and its manipulation as securities fraud.
Unprecedented Legal Ruling
The U.S. Department of Justice (DOJ) announced that Shane Hampton, 32, of Philadelphia, and Michael Kane, 39, of Miami Beach, Florida, were convicted for their involvement in a scheme to manipulate HYDRO’s price. Hampton received a sentence of two years and eleven months in prison, while Kane was sentenced to three years and nine months. According to Principal Deputy Assistant Attorney General Nicole M. Argentieri, this case is a landmark as it is the first time a jury has determined that a cryptocurrency constitutes a security under federal law.
Elaborate Scheme to Manipulate Prices
Court documents reveal that Kane, co-founder and CEO of Hydrogen Technology, and Hampton, Head of Financial Engineering, orchestrated a plan to inflate HYDRO’s market price using a trading bot. From October 2018 to April 2019, they enlisted Moonwalkers Trading Limited to execute fraudulent trades, including $7 million in wash trades and over $300 million in spoof trades. These manipulative actions created an illusion of market activity, misleading retail investors and generating $2 million in profits for the perpetrators.
Kane pleaded guilty to multiple charges, including conspiracy to commit securities price manipulation and wire fraud. Hampton was convicted by a federal jury on charges of conspiracy to commit securities price manipulation and wire fraud. This case sets a crucial precedent for how cryptocurrencies are regulated and highlights the serious legal repercussions for those who engage in fraudulent activities within the crypto market.