Convicted crypto bros seek relief in the 11th Circuit

Source: Courthouse News Service

June 26, 2026


MIAMI (CN) — Two cryptocurrency creators sought reversal of their sentences at the 11th Circuit on Friday, challenging the first federal convictions labeling cryptocurrency as a security and its manipulation as securities fraud. The case stems from an investigation into Hydrogen Technology, its CEO, Michael Kane, and head of engineering, Shane Hampton, who prosecutors say used automated bots to inflate the price of the company’s Hydro cryptocurrency token and attract investors.

According to the indictment, the bots executed more than $300 million in “spoof trades” designed to induce investment, generating nearly $3 million in profits over a 10-month period in 2017 and 2018. A federal jury convicted Hampton and Kane in February 2024 of conspiracy to commit securities price manipulation and conspiracy to commit wire fraud. Hampton was sentenced to two years and 11 months in prison, while Kane received three years and nine months.

“For the first time, a jury in a federal criminal trial found that a cryptocurrency was a security, and the manipulating cryptocurrency prices was securities fraud,” said Justice Department criminal division chief Nicole Argentieri after the convictions. During arguments Friday before a three-judge panel, Hampton’s attorney, Freddy Funes, argued the sale of Hydro tokens was not an investment contract subject to federal securities laws. He said a key element of a security is that investment returns depend on the promoter’s management of funds, not merely investor speculation.

U.S. Circuit Judge Nancy Abudu pushed back. “You don’t have just investor speculation,” the Joe Biden appointee said. “You have comments from co-conspirator telling potential investors, ‘You’re going to make good money back and you’re going to see some returns on your investment.’”

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