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HOME > News > CRYPTOPEDIA > Crypto Market Manipulation Scheme Results in Five DOJ Charges
CRYPTOPEDIANewsPOLICY AND REGULATION

Crypto Market Manipulation Scheme Results in Five DOJ Charges

NFT Studio 24
Posted NFT Studio 24 April 25, 2023 108 Views 4 Min Read
Updated 2023/04/25 at 4:35 PM
Crypto Market Manipulation Scheme Results in Five DOJ Charges
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The United States Department of Justice (DOJ) has charged five individuals in relation to an alleged crypto market manipulation scheme involving the ERC-20 Hydro (HYDRO) token. The indictment charges three individuals, including the former CEO of Hydrogen Technology Corp. Michael Ross Kane, with conspiring to manipulate the market for Hydro, while two other individuals were separately charged for their roles in the scheme.

Contents
Crypto Market Alleged SchemeCrypto market Alleged ProfitsCharges and PenaltiesSEC SuitConclusion

Crypto Market Alleged Scheme

The DOJ alleges that between June 2018 and April 2019, Kane, along with Shane Hampton, Hydrogen’s chief of financial engineering, and George Wolvaardt, conspired to defraud market participants looking to trade the Hydro tokens that Hydrogen issued.

According to the indictment, Wolvaardt, who was the chief technology officer for a market-making firm called Moonwalkers Trading Limited, designed a trading bot that executed a number of high-value “spoof orders” at obscure intervals to make it appear as though there was high demand for the token. The bot also engaged in wash trading, buying and selling large volumes of the token from the same account.

Five Individuals Charged in $2M Virtual Asset and Securities Manipulation Schemehttps://t.co/qLrHjkTKlY

— Criminal Division (@DOJCrimDiv) April 24, 2023

Crypto market Alleged Profits

Following the alleged artificial manipulation of the price of Hydro, the co-conspirators sold large chunks of their holdings. They netted an approximate total of $2 million in ill-gotten profits. Furthermore, the authorities charged Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp., for their alleged involvement in the manipulation scheme.

Charges and Penalties

Kane, Hampton, and Wolvaardt face charges of one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud, and two counts of wire fraud.

If found guilty on all charges, they each face a maximum penalty of five years imprisonment. This is in relation to the conspiracy to commit securities price manipulation charge. Additionally, a staggering 20 years in prison on each of the other charges.

The authorities have charged Ostern and Chorlian with one count each of conspiracy to commit securities price manipulation and wire fraud. If found guilty, they stand to face a maximum penalty of five years in prison.

SEC Suit

On April 20, a New York District Court Judge ruled against Hydrogen Technology Corporation and its former CEO Michael Ross Kane. The suit was brought by the Securities and Exchange Commission (SEC). The authorities ordered them to pay $2.8 million in remedies and civil penalties.

Conclusion

The charges brought by the DOJ and the SEC’s ruling against Hydrogen Technology Corporation. Along with its former CEO Michael Ross Kane, they highlighted the continued scrutiny of the crypto industry by regulatory bodies.

The alleged manipulation of the Hydro token market is a reminder of the potential risks. The lack of regulation in the crypto market is mainly responsible for these issues. They serve as a warning to those who may seek to engage in similar activities.

TAGGED: Crypto Market, Crypto Market Manipulation Scheme

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