Former Holograph employee sentenced over $14M HLG theft

The court found Vitaly K. guilty of organized fraud, money laundering, criminal conspiracy and illegally interfering with an automated data processing system. It also imposed a €600,000 fine. Prosecutors had sought five years in prison and an €800,000 fine.

The case concerned activity from May to August 2024. Prosecutors said Vitaly K. used his former position to alter the platform’s token-creation permissions, mint the tokens and transfer them to a wallet he controlled. He then worked with two accomplices to move the cryptocurrency through exchange accounts. One accomplice was sentenced to two years, including 14 months suspended, and fined €80,000. The other received a two-year suspended sentence and a €40,000 fine.

The theft followed a June 13, 2024, breach of Holograph’s operator contract. The foundation said a former contractor had used administrative access to insert malicious instructions into the system. French authorities arrested suspects in August 2024 after an investigation involving French and Italian authorities; the main defendant was transferred from Italy to France and held from September 2024.

Judges rejected the foundation’s claim for compensation tied to HLG’s falling market price, saying there was not enough evidence to link the decline directly to the fraud. They noted the token had already fallen considerably before the events in question. The defendants were nonetheless ordered to pay the foundation €1.15 million for direct financial losses and €106,800 for other damages. During the trial, the foundation’s lawyer said the company’s operations had stalled and it faced possible liquidation. Vitaly K.’s lawyer, Robin Binsard, called the rejected claim a “fantasy” and said the sentence was substantially below the prosecution’s request.