The Paris Criminal Court has sentenced Vitaly K., a Ukrainian national and former Holograph Foundation employee residing in France, to five years in prison. The defendant was convicted of theft and unauthorized minting of one billion HLG tokens valued at approximately $14 million, or €12.5 million. Under the ruling, the court ordered the defendant to serve two years behind bars, with the remaining three years suspended.
In addition to the prison term, the court ordered Vitaly K. to pay a criminal fine of €600,000. The judge found the defendant guilty on four counts: organized fraud, money laundering, criminal conspiracy, and hacking an automated data system.
Two accomplices who helped transfer the stolen tokens across various crypto exchange accounts were also sentenced. The first associate received a two-year prison sentence, with 14 months suspended, along with an €80,000 fine. The second accomplice received a fully suspended two-year sentence and a €40,000 fine.
Operator Access Exploit and Cross-Border Arrest
The exploit took place between May and August 2024. Vitaly K. leveraged administrative access to Holograph’s operator contract to modify token minting permissions. This contract modification enabled the illicit minting of one billion HLG tokens worth around $14 million, which were subsequently routed to exchange accounts.
The defendant’s flight ended in Italy in August 2024 prior to his extradition to France. The arrest was executed through cross-border cooperation between law enforcement and security specialists, including the French police’s Brigade de Répression du Banditisme (BRB), Europol, Italian police, security firm Halborn, and Cayman Islands authorities.
Why the Judge Rejected Damages for Price Depreciation
Despite convictions on all criminal charges, the Holograph Foundation did not secure full compensation for its claimed losses. The court denied the foundation’s request for damages tied to the decline in HLG token market prices.
The judge’s reasoning rested on the asset’s historical price performance. The court determined that HLG tokens had already suffered sharp depreciation before the exploit took place. Consequently, the token’s market plunge was not considered a direct result of the defendant’s unauthorized minting.
The Paris ruling draws a clear line between cyber exploit penalties and market risks: illegal administrative access and money laundering were met with prison time and hundreds of thousands of euros in fines, while losses stemming from price fluctuations in an asset already under pressure prior to the incident fell outside criminal liability.
Reported by crypto.news.
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Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
