Judge Upholds Conviction of Ex-Hydrogen CFO in HYDRO Token Manipulation Scheme

News | June 18, 2024 By:

On Friday, June 7, 2024, the United States District Court for the Southern District of Florida denied Shane Hampton’s motions seeking acquittal or a new trial in his securities fraud case.

Hampton had been convicted in February of conspiracy to manipulate the price of a security and conspiracy to commit wire fraud related to his work with Hydrogen Technology Corporation. Prosecutors alleged that from 2017 to 2022, Hampton served as the chief financial officer of Hydrogen and participated in the public offering of the company’s digital token HYDRO.

The prosecution claimed that to boost HYDRO’s price and trading volume, Hampton worked with others including Tyler Ostern of market-making firm Moonwalkers to use an automated “bot” programmed by Moonwalkers. This bot allegedly conducted “spoof” orders meant to create a false sense of demand and “wash” trades that involved no real exchange of assets. Such activities were accused of artificially manipulating HYDRO’s price on cryptocurrency exchanges.

In his post-trial motions, Hampton argued the jury was improperly instructed, and several evidence rulings unfairly prejudiced him. He contended the instructions did not require finding he knew HYDRO was a security. However, the court disagreed, stating no proof of subjective intent is required as the crime involves knowingly engaging in manipulative conduct.

Hampton also claimed error in how the court explained the SEC’s Howey test for determining if something qualifies as an investment contract security. But the court found no unfair prejudice from minor wording differences in its Howey instructions versus Hampton’s requested version.

Regarding evidence, Hampton attacked the exclusion of his expert who would have testified on crypto regulation uncertainty. The court stood by its pre-trial Daubert ruling excluding this testimony as not assisting the jury. Hampton further argued he was entitled to introduce evidence of consulting counsel and seeking legitimate market makers. However, the court found this did not negate that Hampton knowingly conspired to commit price manipulation.

Ultimately, the court concluded the evidence sufficiently proved Hampton’s knowledge of the conspiracy based on his research, contract negotiations, communications, and monitoring of trading platforms. Thus, a reasonable jury could have found Hampton guilty. The court denied both his acquittal motion and request for a new trial, finding no unfair prejudice from the rulings or overall jury instructions.

Please contact BlockTribune for access to a copy of this filing.