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Five individuals indicted by the DOJ for purported cryptocurrency price manipulation scheme.
A newly unsealed indictment has accused five individuals of “conspiring to manipulate the market” concerning an alleged scheme involving the ERC-20 Hydro (HYDRO) token.
An April 24 announcement from the United States Department of Justice (DOJ) indicated that the indictment charged three individuals with conspiring to manipulate the market for Hydro. Two additional individuals were charged separately for their involvement in the scheme.
The DOJ claims that from June 2018 to April 2019, Michael Ross Kane, the former CEO of Hydrogen Technology Corp., Shane Hampton, Hydrogen’s chief of financial engineering, and George Wolvaardt deceived market participants seeking to trade the Hydro tokens issued by Hydrogen.
Five Individuals Charged in $2M Virtual Asset and Securities Manipulation Schemehttps://t.co/qLrHjkTKlY
— Criminal Division (@DOJCrimDiv) April 24, 2023
The indictment states that Wolvaardt, who served as the chief technology officer for a market-making firm named Moonwalkers Trading Limited, created a trading bot that executed numerous high-value “spoof orders” at irregular intervals to create the illusion of significant demand for the token. The bot also engaged in buying and selling substantial volumes of the token from the same account — a method known as wash trading.
Following the alleged artificial inflation of Hydro’s price, the DOJ asserts that the co-conspirators sold large portions of their holdings, resulting in approximately $2 million in illicit profits.
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Additionally, Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp., were also charged for their participation in the alleged manipulation scheme.
Kane, Hampton, and Wolvaardt have each been charged with one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud, and two counts of wire fraud.
If convicted on all counts, they each face a maximum sentence of five years in prison for the conspiracy to commit securities price manipulation charge and up to 20 years in prison for each of the other charges.
Ostern and Chorlian have each been charged with one count of conspiracy to commit securities price manipulation and wire fraud. If found guilty, they could face a maximum sentence of five years in prison.
On April 20, a New York District Court Judge ruled against Hydrogen Technology Corporation and its former CEO Michael Ross Kane in a lawsuit filed by the Securities and Exchange Commission (SEC), ordering them to pay $2.8 million in remedies and civil penalties.
Cointelegraph reached out to Michael Kane for a statement but did not receive an immediate reply.
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