A Paris court sentenced a former Holograph Foundation employee to five years in prison, including two years to be served, for illegally creating one billion HLG tokens in 2024. A Paris criminal court has sentenced a former Holograph Foundation employee to five years in prison for fraudulently minting and transferring one billion HLG tokens valued at approximately $14 million during a 2024 cryptocurrency exploit. The November 6, 2026, ruling imposed a five-year sentence, comprising two years of imprisonment and three years suspended under probation, alongside a €600,000 fine.
The defendant, identified in French reporting as Vitaly K., is a Ukrainian national who resided in France. He was convicted of organized fraud, money laundering, criminal conspiracy, and unlawful interference with an automated data processing system. Prosecutors had requested a five-year prison sentence and an €800,000 fine. The defendant had been detained since September 2024, following his arrest in Italy and transfer to French authorities.
Unauthorized Token Creation and Exchange Transfers
According to the court’s findings, the fraudulent activities occurred between May and August 2024, with the defendants operating from Paris and Roquebrune-Cap-Martin in southern France. The former employee exploited his previous access to Holograph’s infrastructure to manipulate token-creation permissions, enabling the unauthorized issuance of one billion HLG tokens. The newly created tokens were subsequently transferred to a cryptocurrency wallet under his control. Two accomplices helped distribute the assets across multiple cryptocurrency exchange accounts.
One accomplice received a two-year prison sentence, including 14 months suspended, and an €80,000 fine. The second received a fully suspended two-year sentence and a €40,000 fine. The incident followed a June 13, 2024, exploit involving Holograph’s operator contract, which managed critical token functions. Holograph subsequently attributed the breach to a former contractor who had manipulated administrative permissions. Contemporaneous market reports estimated the unauthorized tokens’ value at approximately $14.4 million. However, that figure represented the estimated value of the minted tokens rather than confirmed cash proceeds from their sale. The exploit severely disrupted HLG trading, with the token losing approximately 79% of its value within nine hours, according to market data reported at the time.
Court Rejects Compensation Claim for HLG Price Collapse
Although the court convicted all three defendants, it rejected Holograph Foundation’s attempt to recover compensation for the cryptocurrency’s subsequent market depreciation. The foundation argued that the fraudulent issuance contributed to HLG’s substantial price decline. However, judges determined that the token had already experienced significant volatility and depreciation before the incident, making it impossible to establish a sufficiently reliable causal relationship. HLG traded near $0.03 in May 2024 before declining to approximately $0.001 by the end of December.
The court nevertheless ordered the defendants to jointly pay Holograph Foundation €1.15 million for direct financial losses and an additional €106,800 for other damages. During proceedings, the foundation’s lawyer stated that its operations had effectively stopped and that the organization was preparing for liquidation. The ruling highlights the legal consequences of unauthorized cryptocurrency issuance while distinguishing demonstrable financial losses from broader token-price declines that cannot be directly attributed to criminal misconduct.
