The conduct at the heart of the case ran from May to August 2024. During that window, the minting rules for HLG tokens were illegally modified. The changes allowed for the creation and theft of 1 billion HLG tokens. At the time, those tokens were worth roughly €12.5 million, or about $14 million.
Vitaliy K. did not act alone. Two accomplices were also convicted, and both received lighter sentences than the main defendant.
One accomplice was fined €80,000 and handed a two-year prison sentence, with 14 months of it suspended. The other received a €40,000 fine and a two-year sentence that was suspended as well.
The foundation gets no payout
The Holograph Foundation sought compensation for losses tied to the decline in HLG’s price. The court dismissed that claim.
The court’s reasoning came down to causation. HLG had already suffered a significant price drop before the fraudulent acts took place. The judges found no direct link between the crime and the losses the foundation claimed.
The price history backs up why that argument was hard to win. HLG traded at around $0.03 in May 2024. By late December 2024, it had fallen to $0.001.
Background: Holograph and the 2024 exploit
The Holograph Foundation is incorporated in the Cayman Islands. It built cross-chain tools for tokens and NFTs, which let digital assets move between different blockchains.
In July 2024, Holograph and Halborn published a post-mortem on an exploit involving 1 billion HLG tokens on the Mantle chain. The post-mortem attributed that incident to a disgruntled former contractor.
Arrests in Italy followed. A suspect was taken into custody there in September 2024, setting the stage for the prosecution that ended in Paris more than two years later.
The foundation itself is not in good shape. It has stalled its business operations and is preparing for liquidation.
What this means
For anyone still holding HLG, the picture is bleak. A foundation heading for liquidation is not the kind of steward that typically rebuilds a token’s value. The court’s refusal to award compensation also removes one possible source of funds the foundation might have recovered.
The case shows the threat can come from people who already have the keys. A smart contract audit can check whether code works as written. It is far less useful when someone with legitimate access quietly rewrites the rules.
The conviction under conventional French criminal law, covering fraud, money laundering, and unauthorized system access, shows that traditional legal tools can reach crypto insiders without any crypto-specific statute.
The causation ruling is also worth watching for future cases. Courts may be reluctant to award damages for price declines when a token was already falling before a crime occurred. Projects hoping to recover losses through civil claims may need clearer evidence linking specific market damage to specific misconduct.
Holograph’s story now ends with a conviction, a liquidation, and a token that lost most of its value.
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