Sentencing Disgrace

The Prosecutors asked for an 8-10 year sentence, and Mike was sentenced to 3.75-years, based on the absurd U.S. Federal Sentencing Guidelines.

Points System

The U.S. Federal Sentencing Guidelines are based on a “points” system. Unlike a football game, you want a lower number of points. Once you add up the points, there is a guideline range for a sentencing. Judges rely on the sentencing guidelines over 90% of the time to impose a sentence. Prosecutors try to maximize the points to inflict the most amount of pain on defendants.

Starting Points Level (“Offense Level” column in the chart below): 7-Points

7-points would generally lead to a 3-6 Month house arrest sentence for a first time offender (Criminal History I in the chart below).

The “Loss” Enhancement

Enhancements can be added at the discretion of Federal Judges. Each 1-point enhancement is approximately 3-months in prison on the sentencing guidelines.

Enhancements are typically only 2—points. For example, if the judge finds that someone suffered a financial hardship from your crime, there is a 2-point addition to the 7-point starting value. The prosecutors in my case used a special enhancement for financial crimes called “loss,” which can be anywhere from 2-points...to 30-points!

The Prosecutors argued there was a $2 Mil loss on my case in the indictment and over $13 Mil at the sentencing. Over the intervening 18-months, it was $1.6 Mil, $8 Mil, and finally a $1.3 Mil number that the judge accepted. Why did it keep changing wildly? Because the DOJ made it up out of whole cloth! The $1.3 Mil was actually the BTC revenue of Hydrogen in 2018 (on which $400k in taxes were paid BTW), not a loss for any user! $1.3 Mil on the Loss Table equals a 14-point enhancement.

We fought the loss enhancement for nearly 18-months, and presented an expert report that showed that actual loss was anywhere from $0-$33k. We presented good case law that showed a gain for a company can’t be counted as a loss for users. The judge rejected the expert report, saying “it just can’t be that number,” with no mathematical reason behind the decision, and gave Mike the 14 Points. She also totally ignored the case law.

How was the judge able to make a civil gain for a C-Corporation with 60-employees, a Board, Officers, and Venture Capital investors, into a loss attributable to a criminal case against the CEO? Well, because she can. She can do anything she wants. Federal Judges are like gods in the United States.

This 14-point enhancement added 45-months to Mike’s sentence, for a loss that doesn’t exist! This enhancement is currently under appeal.

The Zero Victim Case

Want to know what is even worse about this kangaroo court? The Prosecutors argued there were 4,700 “victims,” but when they presented to the judge 10 of them for a “Victims Enhancement” (+2 Points), she rejected it! So, there weren’t even 10 victims out of 4,700...yet they somehow managed to lose $1.3 Mil? Please make this all make sense!

The DOJ and FBI spent nearly two-years chasing down all 4,700 “victims” to build a restitution case against Mike. To receive restitution, all someone has to do is fill out a one-page form. In that two-year time period, with multiple prosecutors and FBI agents on the case, they only were able to interview 6 people (who said nothing about being enticed to buy HYDRO by any volume) and receive 8 forms back! This is a Kangaroo Court, as seen in a Banana Republic.

Disgrace Compared to Other Cases

Do you want to know how absurd the 45-month sentence + restitution was? Two other co-defendants in the case, who never fought the $1.3 Million loss, signing a piece of paper admitting to it, were each given 0-Months in prison and were not asked to pay a single penny in restitution. This shows how this whole case was a political hit from the start!

Here are other high profile examples of this two-sided justice system:

  • Neil Philips, Glen Point Capital CEO: lost at trial in $700 Million options fraud case, 0-months in prison

  • Aurelien Michel, Mutant Ape Planet NFT creator: admitted to personally making $1.4 Mil, 1-Month in prison

  • CZ, Binance CEO: personally profited $20 Bil from terrorism financing scheme, 4-Months in prison

  • Nikhil Wahi, Coinbase PM: personally profited $900k from insider trading, 10-months in prison

  • The Wolf of Wall Street: personally profited $400 Million in pump and dump schemes, 22-months in prison

  • Caroline Ellison, FTX: pled guilty to defrauding over $8 Billion from 1 Mil investors, 24-Months in prison

  • Mike Ross: personally profited $0, with zero victims, 45-months in prison