Tag: Doj

5 Charged for Hydro Token Market Manipulation

by Blockchain News

The US Department of Justice (DOJ) has charged five individuals with conspiring to manipulate the market in relation to an alleged scheme involving the Hydro (HYDRO) token. The charges include conspiracy to commit securities price manipulation and wire fraud. The three individuals charged with manipulating the market for Hydro are Michael Ross Kane, the former CEO of Hydrogen Technology Corp.; Shane Hampton, Hydrogen’s chief of financial engineering; and George Wolvaardt. The other two individuals were charged separately for their alleged roles in the scheme. Tyler Ostern, the former CEO of Moonwalkers, and Andrew Chorlian, a blockchain engineer from Hydrogen Technology Corp., were also charged for their involvement in the alleged manipulation scheme.

According to the indictment, from June 2018 through April 2019, Kane, Hampton, and Wolvaardt defrauded market participants looking to trade the Hydro tokens that 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 alleged manipulation of the Hydro token price resulted in the co-conspirators making an approximate total of $2 million in ill-gotten profits. The DOJ claims that following the artificial manipulation of the token’s price, the co-conspirators sold large chunks of their holdings.

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.

In a separate case brought by the Securities and Exchange Commission, Hydrogen Technology Corporation and former CEO Michael Ross Kane were ordered to pay $2.8 million in remedies and civil penalties. On April 20, a New York District Court judge ruled against Hydrogen Technology Corporation and Kane in the case. The SEC alleged that Hydrogen and Kane had made false and misleading statements to investors about the company’s financial performance and the development of its technology.

In conclusion, the charges against the five individuals for market manipulation of the Hydro token highlight the importance of transparency and fairness in the cryptocurrency market. The DOJ’s efforts to prosecute individuals who engage in fraudulent activities in the cryptocurrency market sends a strong message that such activities will not be tolerated.

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US DOJ and SEC launch inquiries into Silicon Valley Bank collapse

by Blockchain News

The sudden collapse of Silicon Valley Bank (SVB) has attracted the attention of the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC), who have launched investigations into events leading up to the bank’s closure. According to sources, the probes will scrutinize the stock sales made by SVB financial officers in the weeks before the bank’s collapse, as well as the events that led to its failure.

Reports suggest that SVB’s CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares just two weeks before the bank’s collapse, outraging some observers. Becker reportedly sold $3.6 million worth of shares on February 27, while Beck sold $575,180 in stocks on the same day. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years.

The investigations are in their early stages and may not lead to charges or allegations of wrongdoing, according to sources. However, a formal announcement from the DoJ is expected in the coming days, says another person with direct knowledge of the situation.

In addition to the investigations by the DoJ and SEC, the US Federal Reserve is also looking into how it supervised and regulated SVB before its collapse.

SVB Financial Group, SVB’s parent organization, and two executives were sued by shareholders on March 13. The lawsuit accuses them of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run. The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.

The collapse of SVB has sent shockwaves through the financial industry, prompting warnings from the SEC about potential violations of US securities laws. The investigations by the DoJ and SEC are expected to shed more light on the events that led to the bank’s collapse and the stock sales made by its financial officers.

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DOJ Appeals Against Approval of Voyager-Binance.US Asset Sale

by Blockchain News

The ongoing legal battle between Voyager Digital and U.S. regulators has taken another turn. The U.S. Department of Justice (DOJ) has filed an appeal against the latest decision in the case, which pertains to the sale of assets between Voyager Digital and Binance.US.

On March 8, the U.S. Trustee for Region 2 made the appeal to the U.S. District Court for the Southern District of New York against the approval of Voyager Digital’s Chapter 11 bankruptcy plan. The plan was confirmed only a day prior by U.S. bankruptcy judge Michael Wiles, despite objections from the SEC and other regulators.

The Chapter 11 plan would have allowed Voyager Digital to sell billions of dollars in assets to Binance.US in an effort to regain liquidity to pay back customers. In court filings, Voyager claimed that this deal would allow the company to recover an estimated 73% of customer funds.

However, the SEC and other regulators have been outspokenly against this deal, citing concerns over securities law. In a court filing from Feb. 24, the Texas State Securities Board and the Department of Banking objected to the deal with Binance.US.

Despite these objections, Judge Wiles approved the Chapter 11 plan, stating that he could not put the case into an “indeterminate deep freeze while regulators figure out whether they believe there are problems with the transaction and plan.“ He also noted that 97% of Voyager customers favored the Binance.US deal, according to a poll released in a court filing on Feb. 28.

If U.S. regulators successfully block this deal, Voyager may have to liquidate. The initial bankruptcy was filed on July 5, 2022, as the brokers attempted to restructure and “return value” to more than 100,000 customers.

This legal battle highlights the challenges that cryptocurrency companies face in navigating the regulatory landscape. While the industry is still largely unregulated, U.S. authorities have begun to take a more aggressive stance in recent years. As a result, many companies are struggling to comply with existing regulations and stay on the right side of the law.

For Voyager Digital, the outcome of this legal battle will have significant implications. If the Chapter 11 plan is ultimately approved, the company will be able to sell assets to Binance.US and recover a significant portion of customer funds. However, if regulators block the deal, the company may be forced to liquidate, leaving customers without recourse.

In the meantime, the case serves as a reminder of the importance of regulatory compliance in the cryptocurrency industry. As authorities continue to crack down on illicit activities and push for greater transparency, companies that fail to comply may face severe consequences.

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Data Requested by US DOJ to Supplement Money Laundering Probe on Binance CEO: Report

by Blockchain News

A new report from Reuters revealed that regulators from the United States Department of Justice (DOJ) had, in late 2020, requested information from Binance as it concerns its internal communications concerning its Anti-Money Laundering (AML) systems.

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According to the Reuters report, the request for information specifically sought to probe the role of the exchange’s Chief Executive Officer, Changpeng Zhao, regarding the likely violation of the Bank Secrecy Act. While Reuters said it was not sure how the exchange responded to requests, the regulator’s moves show how well American watchdogs are into crypto trading platforms.

“Regulators across the globe are reaching out to every major crypto exchange to better understand our industry. This is a standard process for any regulated organization, and we work with agencies regularly to address any questions they may have.” Binance Chief Communications Officer Patrick Hillmann said when contacted by Reuters for comment on the regulator’s requests for documents. He added that Binance has “an industry-leading global security and compliance team” with over 500 employees, including former regulators and law enforcement agents.”

Binance and the Reuters Reporting Tussle

Reuters can be tagged as Binance Exchange’s unwelcomed media nemesis as the reputable news agency has published quite a number of damning articles about the trading platform in the past few years.

In April of this year, Reuters alleged that the Russian subsidiary of Binance has a very close tie with the country’s financial regulator, Rosfinmonitoring. The ties alleged in the report involved an agreement by the exchange to share its users’ data with the Russian regulator.

In July, Reuters also alleged that Binance had maintained a weak check-up until mid-2021, a loophole that allowed sanctioned Iranian residents to trade on the exchange. These claims were also compounded by the allegations of fraud that the trading platform had helped, through its weak AML systems, in laundering as much as $2.35 billion worth of cash.

Binance had responded to these allegations as false, and the trading platform claims the media agency is always selective in the data it chooses to publish about the exchange.

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Ex-Coinbase Staff Sued in Insider Trading Case

by Blockchain News

32-year-old Ishan Wahi, the former Product Manager at Nasdaq-listed trading platform Coinbase Global Inc has been charged to court and was presented to the United States District Court for the Western District of Washington for allegedly being the mastermind of an insider trading fraud.

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According to details disclosed by the Department of Justice (DoJ), Ishan, who in his position where he was privy to knowledge of the potential coins that were to be listed on Coinbase, sold the information to his brother, Nikhil Wahi, and his associate Sameer Ramani. 

With the shared information, the three men acquired the potential coins billed for listing, an action they performed up to 14 times to accrue as much as $1.4 million in profit from at least June 2021 to April this year. The scheme was blown when a Twitter user flagged a massive early accumulation of a coin that Coinbase announced it plans to list in one of such trades.

The investigation eventually pointed to Ishan when he was invited to a panel by Coinbase’s director of security operations. This invitation pushed Ishan to attempt to run to India, but law enforcement apprehended him before leaving.

“Today’s charges are a further reminder that Web3 is not a law-free zone,” said U.S. Attorney Damian Williams, “Just last month, I announced the first-ever insider trading case involving NFTs, and today I announce the first ever insider trading case involving cryptocurrency markets.  Our message with these charges is clear: fraud is a fraud, whether it occurs on the blockchain or on Wall Street.  And the Southern District of New York will continue relentlessly bringing fraudsters to justice, wherever we may find them.”

The DoJ and FBI are proactive in terms of bringing offenders in the digital currency ecosystem to book. Prior to this insider trading arraignment which is the first of its kind in the industry, the FBI also spearheaded the investigation into the first-ever insider trading connected with the NFT marketplace, OpenSea, back in June.

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Former OpenSea Staff Charged with Insider Trading Offenses

by Blockchain News

Nathaniel Chastain, a former Head of Product at OpenSea, the largest cryptocurrency trading platform in the world, has been arrested by the Federal Bureau of Investigation (FBI) for alleged insider trading. 

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Chastain has been promptly charged to court by Damian Williams, the United States Attorney for the Southern District of New York, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation.

Per the Department of Justice (DoJ) ’s announcement, Chastain was indicted for trading Non-Fungible Tokens (NFTs) that were scheduled to be featured on the platform’s homepage. The deal described was such that Chastain used his position at OpenSea. He had access to insider information about what projects will be featured on the homepage to acquire the particular NFTs prior to the listing.

He allegedly used anonymous accounts to purchase dozens of the unique NFTs that he typically resells at almost 3X gains after the listing. The charges brought against Chastain show the commitment of the FBI to stamp out insider trading offences, with these ranked as the first of their kind in the digital currency ecosystem.

“NFTs might be new, but this type of criminal scheme is not,” U.S. Attorney Damian Williams, “As alleged, Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself. Today’s charges demonstrate the commitment of this Office to stamping out insider trading – whether it occurs on the stock market or the blockchain.”

There have been a lot of charges levied against criminals in the digital currency ecosystem by the Department of Justice in the past few years. In the course of its activities, the legal entity has released a framework for enforcing crypto-related regulations, and amongst its various enforcement actions is the cracking down of the Netwalker Ransomware Group.

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Crypto CEO Arrested in New York for Wire Fraud Offences

by Blockchain News

Eddy Alexandre, the founder and Chief Executive Officer of EminiFx, has been arrested by law enforcement agents as he faces charges bothering on one count each of commodities and wire fraud respectively.

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Per a press release from the Department of Justice, Alexandre reportedly operated a crypto trading platform as well as a Forex brokerage, an outfit through which he solicited funds from investors.

The funds that have been accrued by Alexandre as of May 2022 were pegged at about $59 million. Investors entrusted their funds into his hands-on grounds that they will be earning at least a 5% interest on a weekly basis. While the subscription to this unachievable scheme was prominent, Alexandre has refused to meet his end of the bargain for all of the featured investors who subscribed to his trading secret.

“Eddy Alexandre allegedly induced his clients to invest over $59 million with promises of huge passive income returns via his own proprietary trading platform called EminiFx,” said U.S. Attorney Damian Williams.

“In reality, no such technology existed, as Alexandre is alleged to have invested very little of their money – most of which he lost – and transferred most of it to his own personal accounts to pay for luxury items for himself.  As in any financial market, foreign exchanges offer high return potential, but investors should be aware of the downside risks of false claims and get rich quick schemes that oftentimes are too good to be true.” 

As highlighted by Williams, the losses that Alexandre accrued sum up to about $6 million, and adequate information was not properly communicated to the authorities.

By the literal definitions of the maximum sentences attached to the offences, Alexandre stands the risk of going behind bars for 30 years. However, the DOJ, said the final decision will be decided by a judge, as is unique with every DOJ-sponsored crypto enforcement action.

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Top 30 Altcoin Explodes After U.S. Authorities Crack 120,000 Bitcoin (BTC) Theft Case

by Dailyhodl

A top-30 crypto asset by market cap is skyrocketing after the U.S. Department of Justice announced it had seized nearly 80% of Bitcoin (BTC) stolen years ago from the Bitfinex crypto exchange.

UNUS SED LEO (LEO), the utility token of the Bitfinex crypto exchange, is up 43% over the last 24 hours.

At time of writing, LEO is trading at $7.12. The utility token of the Bitfinex crypto exchange currently boasts a market cap of $6.7 billion, ranking it as the 26th–largest crypto asset by valuation.

In a statement announcing the seizure by the US authorities, Bitfinex says that if it receives the seized Bitcoin, it will use 80% of the funds to repurchase LEO tokens before sending them to an inaccessible wallet address.

“If Bitfinex receives a recovery of the stolen Bitcoin, as described in the UNUS SED LEO token white paper, Bitfinex will, within 18 months of the date it receives that recovery use an amount equal to 80% of the recovered net funds to repurchase and burn outstanding UNUS SED LEO tokens.”

According to the U.S. Justice Department, federal authorities seized more than 94,000 Bitcoin directly linked to the August 2016 hacking of Bitfinex. Alongside the seizure, two individuals were arrested in Manhattan, NY, and charged with a conspiracy to launder the billions of dollars worth of Bitcoin.

The seized Bitcoin is currently worth over $3.6 billion. Approximately 119,754 Bitcoin were stolen from Bitfinex in the 2016 security breach. Bitcoin was trading at around $600 in August of 2016, giving the stolen Bitcoin a value of just under $72 million at the time of the theft.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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US Authorities To Return Over $150,000,000 in Embezzled Bitcoin Back to Tech Conglomerate Sony

by Dailyhodl

The U.S. Department of Justice (DOJ) is cracking down on criminals who seek to use cryptocurrency as a means of hiding their illicit gains.

In a new press release, the U.S. Attorney’s Office of Southern California announced that it plans to return over $150 million of funds that were stolen from Japanese electronics giant Sony by an employee named Rei Ishii.

As part of an international effort, the Federal Bureau of Investigation (FBI) determined that Mr. Ishii first embezzled the money while Sony was conducting a transfer between accounts.

Ishii diverted the funds to a bank account he controlled in La Jolla, California, then converted it into 3,879 Bitcoin and sent the BTC to a cold wallet.

This past summer the FBI worked closely with Sony and Citibank as well as Japanese law enforcement authorities to investigate the matter. They were successful in obtaining the cold wallet’s private key and subsequently recovered its contents.

Acting U.S. Attorney Randy Grossman said the stolen funds will be returned and also issued a stern warning to those seeking to take advantage of cryptocurrency’s promise of anonymity in order to steal.

He said,

“Criminals should take note: You cannot rely on cryptocurrency to hide your ill-gotten gains from law enforcement.

The United States coordinates extensively with its international partners to forestall crime and retrieve stolen funds.”

FBI Special Agent in Charge Suzanne Turner added,

“The FBI’s technical expertise was able to trace the money to the subject’s crypto wallet and seize those funds.”

A number of domestic agencies coordinated on the investigation, including the DOJ Criminal Division’s Money Laundering and Asset Recovery Section and the Justice Department’s Office of International Affairs.

Mr. Ishii faces criminal charges in Japan. At time of writing Bitcoin is priced at $48,690, meaning that his illicit haul is now worth over $188 million.

Read the entire press release here.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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