First time! U.S. Court Rules Cryptocurrencies Are Securities, Personnel Related to Token HYDRO Sentenced

The U.S. Department of Justice announced on Tuesday that Hydrogen Technology co-founder and CEO Michael Kane and financial engineering director Shane Hampton were sentenced for manipulating the price of Hydrogen Technology’s token HYDRO as a security and planning to defraud investors.

32-year-old Shane Hampton was sentenced to 2 years and 11 months in prison, and 39-year-old Michael Kane was sentenced to 3 years and 9 months in prison.

The first conviction for manipulating the price of crypto securities

Nicole M. Argentieri, Principal Deputy Assistant Secretary of the Criminal Division of the U.S. Department of Justice, stated that Shane Hampton, Michael Kane and their co-conspirators used trading bots to manipulate the price of their company’s tokens to defraud investors. : In this case, a jury in a federal criminal trial ruled for the first time that "cryptocurrency is a security" and that manipulating cryptocurrency prices constituted securities fraud.

The jury unanimously held that the defendant’s sale of HYDRO constituted an investment contract, and therefore the HYDRO tokens were securities under the federal securities laws. The U.S. Department of Justice pointed out that this means that this case is the first time that a cryptocurrency has been identified as a security and has been charged with securities fraud. Convicted criminal cases.

Defendants manipulated the market and made $2 million in profits

According to court documents and trial evidence, Michael Kane and Shane Hampton hired South African company Moonwalkers Trading Limited to use automated trading robots to manipulate HYDRO prices on U.S. cryptocurrency exchanges.

From October 2018 to April 2019, the defendants and their co-conspirators used automated trading robots to issue a large number of false and fraudulent pending orders, including executing approximately $7 million in wash trading (or wash trading) and More than $300 million in deceptive transactions artificially inflated the price of HYDRO to induce retail investors to purchase the token.

The defendant made approximately US$2 million in profit by manipulating HYDRO sales within 10 months.

Michael Kane pleaded guilty in November 2023 to one count of conspiracy to manipulate securities prices, one count of conspiracy to commit wire fraud, and two counts of wire fraud. Shane Hampton was convicted by a federal jury on February 7 this year of one count of conspiracy. Conspiracy to manipulate securities prices and one count of conspiracy to commit wire fraud.

Will many altcoins be targeted by prosecutors in the future?

We know that in fact, there have always been many cases in the cryptocurrency market where there are people who are interested in cutting leeks by manipulating small market capitalization tokens. After the jury is found guilty of manipulating the cryptocurrency market this time, it may lead to a large number of retail investors suing, and we may see more and more situations similar to Hydrogen being sued this time in the future.

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