A Paris court sentenced a former Holograph Foundation staff member to five years in prison and a €600,000 fine for illegally minting and stealing 1 billion HLG tokens worth about $14 million.
A Paris criminal court on November 6 sentenced a former Holograph Foundation employee to five years in prison for orchestrating the illegal creation and theft of 1 billion HLG tokens, an act prosecutors value at about $14 million. The judgment includes two years of actual incarceration, a three‑year suspended term, and a €600,000 fine, while two accomplices received shorter sentences and fines for facilitating the transfer of the stolen assets.
According to the court record, the defendant—identified in French filings as Vitaly K.—exploited his former role at Holograph to alter the protocol’s token‑minting permissions between May and August 2024. By changing these parameters, he generated a billion unauthorized HLG tokens and transferred them to a wallet under his control. The tokens were then distributed across several cryptocurrency exchange accounts with the help of two co‑defendants, who later faced separate prison terms and monetary penalties.
The illegal minting followed a June 13 2024 security breach of Holograph’s operator contract, which the foundation later linked to a former contractor’s administrative access. Holograph worked with blockchain security firm Halborn and French cybercrime investigators (BRB), Europol, Italian authorities, and Cayman Islands police to trace the perpetrators. The main suspect was transferred from Italy to France in September 2024 and remained in custody until the trial, while the accomplices appeared in Paris without detention.
Holograph Foundation sought compensation for both the direct loss of the stolen tokens and the subsequent decline in HLG’s market price, arguing that the fraud caused the token to fall from roughly $0.03 in May 2024 to $0.001 by December. The judges rejected the claim for market‑price damages, citing insufficient evidence of a causal link, but ordered the three defendants to jointly pay €1.15 million in direct damages and €106,800 for other losses. The foundation’s lawyer warned that operations had stalled and liquidation was possible.
The sentencing underscores heightened regulatory scrutiny of token‑minting controls and may prompt other projects to audit smart‑contract permissions more rigorously. Observers will monitor whether Holograph can recover enough capital to avoid liquidation and how exchanges handle accounts linked to the stolen HLG. Additionally, the case may influence future French and EU court decisions on attributing market‑price losses to crypto fraud.
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