The US Department of Justice has sentenced two US citizens for multi-million dollar cryptocurrency securities fraud.
Two executives of the fintech company Hydrogen Technology received prison sentences for their roles in inflating the company's cryptocurrency HYDRO.
In a statement, the US Department of Justice (DOJ) said Hydrogen Technology co-founder and CEO Michael Kane of Miami Beach, Florida, and financial engineering executive Shane Hampton of Philadelphia, Pennsylvania, were sentenced for orchestrating a cryptocurrency securities fraud and wire fraud schemes. .
The men are accused of hiring South African software firm Moonwalkers Trading Limited to inflate the price of HYDRO on a US 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 co-conspirators then executed approximately $7 million in bogus trades and $300 million in bogus trades through the bot and ultimately profited approximately $2 million from the sale of HYDRO.
The Justice Department says this is the first criminal jury to find that cryptocurrency is a security and that manipulating cryptocurrency prices constitutes securities fraud.
“The jury unanimously found that defendants' sales of HYDRO constituted investment contracts, making the token a security under the federal securities laws. Hampton's case was the first criminal jury trial in which cryptocurrency was recognized as a security."
Kane was sentenced to three years and nine months in prison, while Hampton will serve two years and 11 months behind bars.
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