The US Department of Justice (DOJ) has charged five people with “conspiring to manipulate the market” price of an Ethereum-based ERC-20 token called “HYDRO.”
According to a statement released by the United States Department of Justice (DOJ) on April 24, three individuals were charged with conspiring to manipulate the Hydro market. Two additional individuals have been assigned separately for their roles in the conspiracy.
The DOJ alleges that between June 2018 and April 2019, Michael Ross Kane, the former CEO of Hydrogen Technology Corp., Shane Hampton, Hydrogen’s chief of financial engineering, and George Wolvaardt defrauded market participants seeking to trade Hydro tokens issued by Hydrogen.
According to the indictment, Wolvaardt, the chief technology officer of the market-making firm Moonwalkers Trading Limited, designed a trading algorithm that executed several high-value “spoof orders” at obscure intervals to create the appearance of high demand for the token. Additionally, the bot purchased and sold significant quantities of the token from the same account, a practice is known as wash trading.
The DOJ claims that due to the alleged manipulation of Hydro’s price, the co-conspirators sold significant portions of their holdings for approximately $2 million in ill-gotten gains.
In addition, the former CEO of Moonwalkers, Tyler Ostern, and a blockchain engineer from Hydrogen Technology Corp., Andrew Chorlian, was prosecuted for alleged involvement in the suspected manipulation scheme.
Kane, Hampton, and Wolvaardt have each been charged with one count of securities price manipulation conspiracy, one of wire fraud conspiracy, and two of wire fraud.
If found guilty of all charges, each defendant faces a maximum of five years in prison on the conspiracy to manipulate the price of securities charge and a staggering 20 years on each of the other accounts.
Ostern and Chorlian have each been charged with one count of conspiracy to manipulate the price of securities and to commit wire fraud. They could face a maximum of five years in prison if proven guilty.
In a case brought by the Securities and Exchange Commission (SEC), a New York District Court judge declared against Hydrogen Technology Corporation and its former CEO, Michael Ross Kane, on April 20, ordering them to pay $2.8 million in remedies and civil penalties.
