First Charge and Trial Conviction for Cryptocurrency in Securities Price Manipulation Conspiracy

[Gunnar Larson]

https://www.justice.gov/opa/pr/man-convicted-300m-securities-price-manipulation-and-wire-fraud-cryptocurrency-conspiracy


First Charge and Trial Conviction for Cryptocurrency in Securities Price
Manipulation Conspiracy

A federal jury in the Southern District of Florida convicted a Pennsylvania
man today for manipulating the price of a security and scheming to defraud
investors in connection with the purchase of Hydrogen Technology’s
cryptocurrency, HYDRO.

According to court documents and evidence presented at trial, Shane
Hampton, 32, of Philadelphia, served as the head of financial engineering
at Hydrogen Technology and orchestrated a months-long scheme to manipulate
the price of HYDRO. Hampton and his co-conspirators hired an outside firm,
Moonwalkers Trading Limited of South Africa, to run an automated trading
system or “bot” to manipulate the price of HYDRO on a cryptocurrency
exchange in the United States by flooding the market with fake and
fraudulent orders from October 2018 to April 2019.

Hampton and his co-conspirators executed approximately $7 million in “wash
trades” and placed over $300 million in “spoof trades” for HYDRO through
the bot. Collectively, these spoof and wash trades were designed to, and
did, fraudulently induce retail investors to purchase HYDRO so that Hampton
and his co-conspirators could sell Hydrogen Technology’s own holdings of
HYDRO for over $1.5 million over the course of a seven-month period.

The jury convicted Hampton of conspiracy to commit securities price
manipulation and conspiracy to commit wire fraud. He is scheduled to be
sentenced on April 29 and faces a maximum penalty of five years in prison
for the conspiracy to commit securities price manipulation conviction and
20 years in prison for the conspiracy to commit wire fraud conviction. A
federal district court judge will determine any sentence after considering
the U.S. Sentencing Guidelines and other statutory factors.

Hampton is the fourth defendant to be convicted as part of the case.
Michael Kane, the CEO of Hydrogen Technology, pleaded guilty to the same
charges and is awaiting sentencing; Andrew Chorlian, an engineer at
Hydrogen Technology, also pleaded guilty to conspiracy to commit securities
price manipulation and wire fraud and is awaiting sentencing; and Tyler
Ostern, the CEO of Moonwalkers Trading Limited, also pleaded guilty to
conspiracy to commit securities price manipulation and wire fraud and has
been sentenced to two years in prison.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice
Department’s Criminal Division, U.S. Attorney Markenzy Lapointe for the
Southern District of Florida, and Assistant Director Michael D. Nordwall of
the FBI’s Criminal Investigative Division made the announcement.

The FBI Miami Field Office investigated the case. Former Assistant U.S.
Attorney Eric Morales for the Southern District of Florida assisted in the
investigation of the case.

Trial Attorney Andrew Jaco and Assistant Chief Scott Armstrong of the
Criminal Division’s Fraud Section are prosecuting the case.
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