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American duo ends up in jail for manipulating cryptocurrency prices
Michael Kane and Shane Hampton were sentenced to prison for manipulating the price of their company’s cryptocurrency, Hydrogen Technologies, with wash and spoof trading, thereby defrauding investors.
Kane, the company’s co-founder and CEO, was sentenced to three years and nine months in prison, while Hampton, the company’s chief financial officer, was sentenced to two years and 11 months, the Department of Justice announced Tuesday.
The sentence came after Kane pleaded guilty to conspiracy to commit securities price manipulation, one case of conspiracy to commit wire fraud and two cases of wire fraud last November. Hampton, on the other hand, was convicted in February of one count of conspiracy to manipulate securities prices and one count of conspiracy to commit wire fraud.
“Shane Hampton, Michael Kane, and their co-conspirators defrauded investors by using a trading bot to manipulate the price of their company’s cryptocurrency,” said Principal Deputy Attorney General Nicole Argentieri.
Wash and falsify operations
The duo hired South Africa-based Moonwalkers Trading to manipulate the price of Hydrogen Technologies’ token HYDRO on a U.S.-based cryptocurrency exchange. Between October 2018 and April 2019, the cryptocurrency exchange flooded the market with fake and fraudulent orders using a system automated trading application or “bot”.
Court documents showed that the bot executed approximately $7 million in “wash crafts” and invested $300 million in “spoofed trades.” These trades increased the price of HYDRO, causing retail traders to purchase the token.
Additionally, Kane, Hampton and their accomplices earned approximately $2 million from the sale of HYDRO over a 10-month period.
Meanwhile, the jury in the case found that HYDRO qualifies as an investment contract, making it an unregistered security.
“In this case, for the first time, a jury in a federal criminal trial determined that a cryptocurrency was a security and that cryptocurrency price manipulation was securities fraud,” Argentieri 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, including the federal securities laws, to protect the integrity of the cryptocurrency markets.”
Michael Kane and Shane Hampton were sentenced to prison for manipulating the price of their company’s cryptocurrency, Hydrogen Technologies, with wash and spoof trading, thereby defrauding investors.
According to the Justice Department’s announcement yesterday (Tuesday), Kane, the company’s co-founder and CEO, was sentenced to three years and nine months in prison, while Hampton, head of financial engineering, was sentenced to two years and 11 months.
The sentence came after Kane pleaded guilty to conspiracy to commit securities price manipulationone count of conspiracy to commit wire fraud and two counts of wire fraud last November. Hampton, on the other hand, was convicted in February of one count of conspiracy to commit securities price manipulation and one count of conspiracy to commit wire fraud.
“Shane Hampton, Michael Kane, and their co-conspirators defrauded investors by using a trading bot to manipulate the price of their company’s cryptocurrency,” said Principal Deputy Attorney General Nicole Argentieri.
Wash and falsify operations
The duo hired South Africa-based Moonwalkers Trading to manipulate the price of HYDRO, Hydrogen Technologies’ token, on a US-based cryptocurrency exchange. Between October 2018 and April 2019, the cryptocurrency exchange flooded the market with fake and fraudulent orders using a system automated trading application or “bot”.
Court documents showed that the bot executed approximately $7 million in “wash the trades” and invested $300 million in “spoofed trades.” These trades increased the price of HYDRO, causing retail traders to purchase the token.
Additionally, Kane, Hampton and their co-conspirators made approximately $2 million from the sale of HYDRO over a 10-month period.
Meanwhile, the jury in the case found that HYDRO qualified as an investment contract, making it an unregistered security.
“In this case, for the first time, a jury in a federal criminal trial determined that a cryptocurrency was a security and that cryptocurrency price manipulation was securities fraud,” Argentieri 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, including the federal securities laws, to protect the integrity of the cryptocurrency markets.”