Key Takeaways
- The individuals allegedly used a trading bot to place thousands of “spoof orders” and “wash trades” to manipulate the market and gained around $2 million in profit.
- DOJ alleges that Kane, Hampton and Wolvaardt defrauded market participants by creating the false appearance of supply and demand for HYDRO to induce other market participants
Three individuals, including two US citizens and a South African national, have been charged with conspiring to manipulate the market for HYDRO, a digital asset built on Ethereum blockchain by the Hydrogen Technology Corporation.
As per court documents, Michael Kane, the co-founder/ CEO of Hydrogen Technology, Shane Hampton, the Chief of Financial Engineering for the company, and George Wolvaardt, the Chief Technology Officer for Moonwalkers Trading Limited, conspired to manipulate the market for HYDRO.
Tyler Ostern, Ex-CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer at Hydrogen Technology, were also charged for participating in the scheme.
The US Department of Justice alleges that Kane, Hampton, and Wolvaardt defrauded market participants by creating the false appearance of supply and demand for HYDRO to urge market participants to trade at quantities, price, and times that they otherwise would not have traded.
In its press release, the DOJ stated that the defendants used a trading bot to place thousands of “spoof orders” and “wash trades,” where the bot bought as well as sold tokens to itself through the same account. Reportedly, the defendants gained around $2 million in profit through their sales of HYDRO at artificially inflated prices.
The individuals Kane, Hampton, and Wolvaardt are charged with one count of conspiracy to commit wire fraud, one count of conspiracy to commit securities price manipulation, and two counts of wire fraud. According to DOJ, Chorlian, and Ostern are each charged with one count of conspiracy to commit securities price manipulation and wire fraud.
If convicted, the individuals are expected to face a maximum penalty of 5 years in prison on the conspiracy to commit securities price manipulation count
The latest development is part of the DOJ’s increased crackdown on crypto-related frauds. Earlier this year, the Department of Justice declared the confiscation of digital currency valued at around $112 million connected to fraudulent cryptocurrency investments.
In addition, in Mid-2022, the DOJ made it evident that it plans to coordinate crypto investigations by over a dozen law enforcement teams from the top with a group of specially-trained prosecutors.
