US DOJ Indicts 5 Individuals In Alleged Cryptocurrency Market Manipulation Scheme

Republished By Plato

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The US Department of Justice (DOJ) has charged five individuals over an alleged cryptocurrency price manipulation scheme. The announcement surfaced marking a significant step in the government’s efforts to crack down on illegal activity in the crypto market.

The report from the DOJ revealed that it charged three people for the conspiracy. The other two individuals were charged for playing significant roles in facilitating the scheme.

Perpetrators Used A Trading Bot To Manipulate Crypto Price

Based on the report, the DOJ accused the five defendants of conspiring to manipulate the prices of an Ethereum-based digital currency, Hydro. The alleged scheme involved placing fraudulent orders on cryptocurrency exchanges to create the illusion of market demand and artificially inflate prices.

The perpetrators include the former CEO of Hydrogen Technology Corp., Michael Ross Kane, the chief of financial engineering at Hydrogen, Shane Hampton, and George Wolvaardt, former chief technology officer at Moonwalkers Trading Limited. The DOJ noted that the defendants carried out the scheme between June 2018 and April 2019.

Wolvaardt created a trading bot that can manipulate the token’s price and the trading bot executed certain high-valued orders at irregular intervals, creating a fake high demand for the Hydro token. The trading bot also bought and sold the token in large volumes – a practice referred to as wash trading.

The DOJ alleges the defendants made substantial ill-gotten profits of about $2 million. As such, the security department has charged all five defendants with conspiracy to commit wire and bank fraud and will face up to five years in prison if convicted.

Avoiding Crypto Price Manipulation Schemes

Crypto price manipulation schemes typically involve wash trading, pump and dump, spoofing, and insider trading to artificially manipulate a cryptocurrency’s price.

US DOJ Indicts 5 Individuals In Alleged Cryptocurrency Market Manipulation Scheme — The total crypto market is down today l Source: Tradingview.com

These tactics can harm honest investors and damage the credibility of the cryptocurrency market. The security department is aware of this and determined to curb the situation.

Considering the industry’s growth rate of crypto price manipulation schemes, digital asset investors and traders must be cautious when dealing with the system. On that note, it’s crucial to understand the market and employ strategies to reduce risk chances. For cryptocurrency traders, holding trades for a longer term could help them avoid such manipulations.

Crypto exchanges and users can leverage a marketplace services platform to help avoid crypto price manipulations. This cloud-based service and platform allow exchanges to perform streamlined operations through a single trusted source.

They can also implement a market surveillance solution that detects and analyzes marketplace abuses. It combines data into a simpler snapshot, enabling investigators to detect potential abuse.

Meanwhile, crypto investors are advised to deal with trusted exchanges with good reputations to stay away from these occurrences.

Featured image from Pixabay and chart from Tradingview