SEC Victorious in Lawsuit Against Alleged Crypto Token Price Manipulation, Awarded $2.8M

Updated: 24 April 2023

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A New York District Court Judge ordered Hydrogen Technology Corp. and its former CEO, Michael Ross Kane, to pay $2.8 million in fines and remedies for allegedly operating a price manipulation scheme.

The Securities and Exchange Commission (SEC) brought a lawsuit against the firm, which lasted seven months, and the judge ruled against them. The $2.8 million payment comprises approximately $1.5 million in “disgorged” profits and a penalty of over $1 million. Additionally, Kane agreed to pay an individual fine of around $260,000; the remaining amount is prejudgment interest.

We announced charges against The Hydrogen Technology Corporation, its former CEO, Michael Ross Kane, and CEO of Moonwalkers Trading Limited, Tyler Ostern, for unregistered offers, sales, and manipulation of crypto asset securities called “Hydro.”

— U.S. Securities and Exchange Commission (@SECGov) September 30, 2022

The SEC accused Kane of using Hydrogen’s market maker, Moonwalkers Trading Limited, to manipulate the volume and price of its ERC-20 token, Hydro (HYDRO). The SEC has accused Kane and Moonwalkers CEO Tyler Ostern of creating a 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.

According to the SEC’s complaint, Ostern sold the tokens in an artificially inflated market, which resulted in Hydrogen netting more than $2 million in profit. Ostern settled the case for $41,000 just a day after the complaint was filed, and both Hydrogen and Kane are now bound by the settlement’s conditions, which prohibit them from further disputing the charges levied against them by the SEC.

The settlement also bars Kane and his firm from selling additional cryptocurrency until the Hydro tokens pass the Howey test and receive further approval from the SEC. Despite this restriction, Kane can still participate in the broader cryptocurrency market, which means he can still buy and sell crypto assets for personal gain.

Mixed Crypto Trends and Regulatory Contention within SEC and Congress

The SEC’s harsh stance towards cryptocurrencies has faced opposition from external sources and within the regulatory body itself. One such critic is SEC commissioner Hester Peirce, known for her supportive views on crypto. Peirce has voiced her dissatisfaction with the proposed rule amendments, stating that the SEC has relied on enforcement actions to shape the law rather than creating comprehensive regulations.

The SEC’s recent legal actions against various crypto companies have caused concern among analysts and crypto enthusiasts, who question the regulatory body’s approach to crypto-related matters.

Chair Gary Gensler and Congressman Warren Davidson hold opposing views on regulating cryptocurrencies, with Gensler advocating for increased regulation and Davidson believing that Gensler’s approach is too restrictive. Due to their disagreement, Davidson has announced his intention to introduce legislation to remove Gensler from his position as Chair of the Securities and Exchange Commission (SEC).

Meanwhile, altcoins BNB and SOL are experiencing an upward trend due to their respective endeavors. The crypto market also sees SignUpToken preparing for its launch, although the release date has yet to be announced.

Criticism from some crypto advocacy groups has been drawn from Gensler’s recent announcement that the SEC is revisiting its proposed redefinition of an “exchange,” as they believe it overreaches the SEC’s authority.

The issue of crypto regulation remains a point of contention with Davidson, while the crypto market experiences mixed trends, with some altcoins seeing upward trends and others preparing for their launch.

Amidst the ongoing changes and uncertainties within the SEC’s leadership, SignUpToken.com presents a promising opportunity for blockchain enthusiasts, fintech users, and crypto investors. The project offers a unique blend of DeFi and a referral system that encourages users to invite others to join, fostering the growth of decentralized finance.