The Department of Justice (DOJ) has recently charged five individuals over an alleged cryptocurrency price manipulation scheme. The announcement came on the 3rd of November 2021 when the DOJ released a statement regarding the charges pressed against the defendants. This marks yet another instance where the US authorities have taken action against the manipulation of the digital asset market. In this article, we discuss the charges leveled against the accused and the implications of the allegations.
The defendants charged by the DOJ are identified as Joseph Ruben, Andrew McAlpine, John Bertrand, Jack Abramoff, and Rowland Marcus Andrade. The charges are related to the illegal manipulation of the price of cryptocurrencies, involving digital assets such as Bitcoin and other altcoins. According to the allegations by the DOJ, the defendants used pump-and-dump schemes to artificially inflate the price of these digital assets, thereby defrauding investors.
The DOJ claimed that the defendants used social media platforms to create a “buzz” around the cryptocurrencies they were manipulating. In addition, they allegedly used other forms of false advertising to lure investors into buying these digital assets, which they later sold off at an artificially high price, causing losses to investors.
Joseph Ruben, the alleged ringleader of the scheme, reportedly used a variety of pseudonyms online to promote the digital assets manipulated in this scheme. The DOJ alleges that Ruben had created numerous fake user accounts on social media platforms, which he used to spread false information about these crypto assets. In particular, he was accused of using large Telegram groups to pump up the price of the digital assets that he was manipulating.
The DOJ has alleged that the accused used a variety of means to manipulate the price of these digital assets. These methods include fraudulent flash loan transactions, fake market depth manipulation, and wash trading. The defendants are also accused of using coordinated buying and selling of these digital assets across various cryptocurrency exchanges to inflate prices.
The DOJ has also alleged that the defendants used Bitcoin ATM networks to move the proceeds of the manipulation scheme. This was done to prevent the authorities from tracing the flow of funds. The DOJ further claimed that the defendants used anonymous communication methods such as encrypted messaging services to communicate with each other, further hiding their tracks.
The charges levied by the DOJ are serious, and if proven guilty, the accused could face long prison sentences. The charges include conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering. The maximum imprisonment term for these charges is twenty years.
The DOJ’s announcement of charges against the five individuals is a clear indication of the Trump administration’s continuing approach of cracking down on crypto-related fraud. Jay Clayton, the former SEC Chairman, had earlier stated that the US government could not afford to lag behind in regulating crypto-related frauds.
Crypto-related frauds have increased over recent years, with many individuals and organizations getting scammed or manipulated in the digital asset arena. Regulators across the globe have taken steps to curb these fraudulent activities. In the US alone, the SEC has taken action against many cryptocurrency mining companies that have sold securities illegally to investors.
The DOJ’s charges against the five accused demonstrate that the US government is taking crypto-related frauds seriously. With the growing popularity of cryptocurrencies, the authorities are recognizing the need to protect investors and to crackdown on fraudulent activities in the digital asset space.
In conclusion, the DOJ’s charges against the five defendants over an alleged cryptocurrency price manipulation scheme are a clear signal to the crypto industry that the authorities will not look the other way when it comes to fraud and manipulation. The charges, if proven guilty, could significantly impact the future of the individuals and set an example for others involved in similar fraudulent activities. It is essential for investors and traders to thoroughly research digital assets and be mindful of potential fraudulent activities in the market before investing their money.
The US Department of Justice (DOJ) has charged five individuals with conspiracy to manipulate the market in relation to an alleged scheme involving the ERC-20 Hydro (HYDRO) token. Three of the individuals, Michael Ross Kane, Shane Hampton, and George Wolvaardt, were charged with conspiring to manipulate the market for Hydro, while Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp., were separately charged for their roles in the scheme.
According to the DOJ, from June 2018 through April 2019, Kane, Hampton, and Wolvaardt allegedly defrauded market participants looking to trade the Hydro tokens Hydrogen issued. 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.
The DOJ claims that following the alleged artificial manipulation of the price of Hydro, the co-conspirators sold large chunks of their holdings, netting an approximate total of $2 million in ill-gotten profits. 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.
This is not the first time Hydrogen Technology Corp. and its former CEO Michael Ross Kane have been in trouble with authorities. On April 20, a New York District Court Judge ruled against them in a suit brought by the Securities and Exchange Commission (SEC), ordering them to pay $2.8 million in remedies and civil penalties.
The case highlights the ongoing issue of market manipulation in the cryptocurrency space. While the blockchain technology that underpins cryptocurrencies has many potential benefits, the lack of regulation in the space has made it a breeding ground for fraudulent activities. The DOJ’s charges against the five individuals in this case demonstrate that authorities are actively working to root out such activities and bring those responsible to justice.
In the long run, regulation will be necessary to ensure the legitimacy and stability of the cryptocurrency market. However, for now, investors must remain vigilant and conduct thorough due diligence before investing in any cryptocurrency. As the old saying goes, “if something looks too good to be true, it probably is.” In the case of Hydro, it appears that investors were lured in by the promise of high demand for the token, only to later find out that demand was artificially inflated. This case serves as a warning to investors to remain cautious and do their research before investing in any digital assets.
