MIAMI – The Miami-based co-founder of a cryptocurrency company was among five men charged in a $2 million “manipulation scheme,” federal prosecutors said Monday.
Michael Kane, 38, was the co-founder and CEO of Hydrogen Technology.
Recommended Videos
He, along with Shane Hampton, 31, of Philadelphia, and George Wolvaardt, 38, of Johannesburg, South Africa, are accused of trying to manipulate the market for HYDRO, a token on the Ethereum blockchain platform.
The trio defrauded market participants “by creating the false appearance of supply and demand for HYDRO to induce (others) to trade at prices, quantities and times that they otherwise would not have traded,” according to a U.S. Department of Justice news release.
Prosecutors said Kane, Hampton and Wolvaardt “used a trading bot to place thousands of orders that they did not intend to execute, or ‘spoof orders,’ and thousands of orders where the bot bought and sold tokens to itself through the same account, or ‘wash trades.’”
Wolvaardt was the chief technology officer for Moonwalkers Trading Limited, “a self-described ‘market-making’ firm that purportedly designed the trading bot and was hired by Kane and Hampton to manipulate the market for HYDRO,” prosecutors said.
The three were able to make $2 million through sales of HYDRO at “artificially inflated prices,” prosecutors alleged.
Also charged in the scheme were Tyler Ostern, 29, of Coos Bay, Oregon, the former CEO of Moonwalkers, and Andrew Chorlian, 29, of New York, a blockchain engineer at Hydrogen Technology.
Prosecutors charged Kane, Hampton, and Wolvaardt with one count of conspiracy to commit securities price manipulation, one count of conspiracy to commit wire fraud and two counts of wire fraud. The three could spend decades in prison, officials said.
Ostern and Chorlian each faced counts of conspiracy to commit securities price manipulation and wire fraud. Prosecutors said the two could spend up to five years behind bars.