Five people have been charged in relation to alleged market manipulation of an Ethereum-based token called “Hydro.”
A freshly unsealed indictment has charged five individuals with “conspiring to manipulate the market” in relation to an alleged scheme involving the ERC-20 Hydro (HYDRO) token.
An April 24 statement from the United States Department of Justice said that the indictment charged three people for conspiring to manipulate the market for Hydro. Two other individuals were separately charged for their alleged roles in the scheme.
The DOJ alleges that from June 2018 through 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 looking to trade the Hydro tokens thaHydrogen issued.
Five Individuals Charged in $2M Virtual Asset and Securities Manipulation Schemehttps://t.co/qLrHjkTKlY
— Criminal Division (@DOJCrimDiv) April 24, 2023
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 bought and sold large volumes of the token from the same account — a practice known as wash trading.
Following the alleged artificial manipulation of the price of Hydro, the DOJ claims the co-conspirators sold large chunks of their holdings netting an approximate total of $2 million in ill-gotten profits.
In addition, Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp. were also charged for their involvement 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 found guilty on all charges, they each face a maximum penalty of five years imprisonment in relation to the conspiracy to commit securities price manipulation charge and a staggering 20 years in prison on 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 face a maximum penalty of five years in prison.
On April 20, a New York District Court judge ruled against Hydrogen Technology Corporation and former Hydrogen CEO Michael Ross Kane, in a suit brought by the Securities and Exchange Commission, ordering them to pay $2.8 million in remedies and civil penalties.
Cointelegraph contacted Michael Kane for comment but did not immediately receive a response.
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