Former Head of Financial Engineering Convicted for Crypto Price Manipulation Conspiracy
A former head of financial engineering at Hydrogen Technology Corp, Shane Hampton, has been convicted by a Florida federal jury for his involvement in a conspiracy to manipulate the price of the company’s native cryptocurrency token, Hydro. Hampton allegedly orchestrated a scheme that involved manipulating the token’s price on a US-based crypto exchange using an automated trading bot. The fraudulent trades, including “wash trades” and “spoof trades,” lured retail investors to purchase the token, resulting in the sale of Hydrogen’s own token holdings for $1.5 million over seven months. Hampton is facing a maximum penalty of five years in prison for securities price manipulation and 20 years for wire fraud.
Convicts Used ‘Bot’ to Manipulate Hydro Price
Hampton and his co-conspirators used an automated trading bot provided by a third-party firm to manipulate the price of Hydro on a US-based crypto exchange. From October 2018 to April 2019, they flooded the market with fake orders, executing $7 million in wash trades and $300 million in spoof trades for Hydro. These fraudulent activities attracted retail investors to purchase the token, allowing Hydrogen to sell their own token holdings for $1.5 million within seven months.
CEO and Engineer Also Facing Charges
Prior to Hampton’s conviction, Hydrogen Technology Corp’s CEO, Michael Kane, faced charges for unregistered offers and sales of Hydro as well as manipulating its trading volume and price. These actions resulted in over $2 million in profits for Hydrogen. Additionally, Andrew Chorlian, an engineer at the company, pleaded guilty to conspiracy to commit wire fraud and price manipulation. Both Kane and Chorlian are awaiting sentencing.
Hot Take: Conviction Highlights the Need for Regulatory Compliance
The conviction of Shane Hampton for crypto price manipulation serves as a reminder of the importance of regulatory compliance in the cryptocurrency industry. Manipulative practices not only harm investors but also undermine trust in the market. This case highlights the need for increased scrutiny and enforcement to protect retail investors and maintain the integrity of the crypto market. As cryptocurrencies continue to gain mainstream adoption, it is crucial for companies and individuals to operate within legal boundaries and adhere to regulatory guidelines to ensure a fair and transparent marketplace.
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