The US Securities and Exchange Commission (SEC) has concluded a seven-month legal battle with Hydrogen Technology Corporation and its former CEO, Michael Ross Kane. A New York District Court Judge ruled against them and ordered the company and Kane to pay $2.8 million in remedies and civil penalties for allegedly manipulating the price of cryptocurrencies. The SEC accused Kane of engaging in a plan to influence the volume and price of Hydrogen’s ERC-20 token, Hydro (HYDRO), by using market maker Moonwalkers Trading Limited.
The SEC stated that Kane and Moonwalkers CEO Tyler Ostern conspired to create the false appearance of robust market activity after the distribution of Hydrogen’s Hydro tokens through airdrops, bounty programs, and direct-to-market sales in 2018. Ostern was accused of selling the tokens in an artificially inflated market, enabling Hydrogen to make over $2 million. One day after the SEC filed the complaint, Ostern resolved it for $41,000.
The settlement’s terms prohibit Hydrogen and Kane from contesting the allegations made against them by the SEC. Additionally, they are not allowed to sell any more cryptocurrencies until the Hydro tokens have passed the Howey test and obtained additional SEC permission. However, Kane is still permitted to trade in the larger bitcoin market for his own benefit.
The $2.8 million settlement, which includes more than $1 million in fines and around $1.5 million in disgorged profits, highlights the SEC’s continued efforts to regulate the crypto industry and protect investors from fraud and manipulation. This case serves as a reminder to companies and individuals operating in the crypto space to comply with securities laws and regulations. Failure to do so may result in significant legal and financial consequences.
