Former CEO of Hydrogen Technology Corporation, Michael Kane, has been sentenced to approximately four years in prison by a Florida judge after pleading guilty to securities fraud. The judge also sentenced Shane Hampton, the former Head of Financial Engineering at Hydrogen Technology, to 35 months in prison for similar crimes.
In a statement released by the United States Justice Department, Principal Deputy Assistant Attorney General Nicole Argentieri emphasized that this case marked the first time a federal criminal trial found a cryptocurrency to be a security and that manipulating cryptocurrency prices amounted to securities fraud. Argentieri also warned that the Criminal Division would use all available tools, including federal securities laws, to safeguard the integrity of cryptocurrency markets.
The charges against Kane and Hydrogen Technology were brought by the U.S. Securities and Exchange Commission (SEC) in September 2022, accusing Kane of using the firm’s market maker to manipulate the volume and price of the company’s Hydro (HYDRO) token. In April 2023, a New York judge ordered Kane and the firm to pay $2.8 million in remedies and civil penalties. Around the same time, Kane and Hampton’s criminal indictments in the Southern District of Florida were announced.
Kane pleaded guilty to one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud, and two counts of wire fraud. He had been awaiting sentencing since November 2023, while Hampton was convicted of similar charges by a jury in February. Two other former Hydrogen Technology executives involved in the scheme, Andrew Chorlian and Tyler Ostern, pleaded guilty in May 2023.
The criminal case against Kane and Hampton reflects the U.S. authorities’ ongoing efforts to target cryptocurrencies that are considered securities under the SEC’s purview. While the SEC has civil cases against various crypto firms, including Coinbase, Ripple, Kraken, and Binance, it has reportedly refrained from classifying Ether (ETH) as a security.
Consensys, a security firm, revealed on June 19 that the SEC did not plan to take enforcement action against Ether, following a lawsuit filed by Consensys against the SEC in April. The lawsuit was titled “Godzilla vs. Kong: SEC faces fierce battle against crypto’s legal firepower.”