SEC wins $2.8M lawsuit over crypto token pricing manipulation

By: Michael Wilson

SEC wins $2.8M lawsuit over crypto token pricing manipulation

April 24, 2023 7:17 AM

Hydrogen Technology Corp. and its previous CEO will have to pay $2.8 million in fines and restitution for allegedly running a price-fixing conspiracy.


A seven-month-long litigation between the US Securities and Exchange Commission and a business accused of manipulating cryptocurrency prices has concluded with a $2.8 million payment.


Hydrogen Technology Corporation and its former chief executive officer Michael Ross Kane was found guilty in a lawsuit→ brought by the Securities and Exchange Commission (SEC) on April 20 and were ordered to pay $2.8 million in settlements and other civil penalties.


The total includes nearly $1.5 million in "disgorged" profits (gains obtained through illegal action) and a penalty of more than $1 million.


In addition, Hydrogen CEO Michael Kane consented to pay a $260,000 fine as an individual. The balance is made up of prejudgment interest.


The SEC filed a lawsuit in September 2022 that Kane utilized Hydrogen's market maker Moonwalkers Trading Limited to carry out a scheme that manipulated the volume and price of its ERC-20 token Hydro (HYDRO).


According to the SEC, Kane and Moonwalkers CEO Tyler Ostern conspired "to create the false appearance of robust market activity" following the distribution of Hydrogen's Hydro tokens through airdrops, bounty programs, and direct-to-market sales in 2018.

 


Ostern allegedly made over $2 million for Hydrogen by selling tokens in a "artificially inflated market," as alleged by the SEC.


Ostern decided to pay $41,000 to end the legal proceedings just one day after the lawsuit was filed.


Hydrogen and Kane have agreed to a settlement that prevents them from further challenging the SEC's allegations against them.


Kane and the firm will be barred from selling any additional cryptocurrencies until the Hydro tokens pass the Howey test and gain additional SEC approval.


Kane can still participate in the broader cryptocurrency market, which means he can still purchase and sell crypto assets for personal benefit.