SEC wins suit over alleged crypto price manipulation

A New York District Court Judge ruled against Hydrogen Technology Corporation and its ex-CEO Michael Ross Kane in a suit brought by the SEC, ordering them to pay $2.8mln in remedies and civil penalties

A seven-month-long lawsuit between the US Securities and Exchange Commission (SEC) and a company supposed to have influenced the price of crypto currencies has come to an end with a $2.8mln payment.

On April 20, a New York District Court Judge ruled against Hydrogen Technology Corporation and its ex-Chief Executive Officer Michael Ross Kane in a suit brought by the SEC, ordering them to pay $2.8mln in remedies and civil penalties.

The amount consists of around $1.5mln in “disgorged” profits — which refers to gains made from illegal activities — in addition to a fine of over $1mln.

Moreover, Hydrogen Chief Executive Officer Michael Kane agreed to pay an individual penalty of nearly $260k. The leftover amount consists of prejudgement interest.

In September 2022, the Securities and Exchange Commission filed its complaint alleging Kane used Hydrogen’s market maker Moonwalkers Trading Limited to carry out a scheme that influenced the volume and price of its ERC-20 token Hydro (HYDRO).

The Securities and Exchange Commission claimed Kane and Moonwalkers Chief Executive Officer Tyler Ostern worked to create the wrong appearance of strong market activity after the distribution of Hydrogen’s Hydro tokens in the form of airdrops, bounty programs and direct-to-market sales in 2018.

As per the Securities and Exchange Commission’s charge, Ostern sold the tokens in an “artificially inflated market” which resulted in Hydrogen netting over $2mln in profit.

A day after the complaint was brought forward, Ostern agreed to settle the case for $41k.

Hydrogen as well as Kane are now bound by the settlement conditions, which prohibits them from further disputing the charges that have been levied against them by the Securities and Exchange Commission.

Kane and the company will be barred from selling any further crypto currency until the Hydro tokens have cleared the Howey test and received further approval from the Securities and Exchange Commission.

Kane is still allowed to take part in the broader crypto currency market, meaning he can still buy and sell crypto assets for personal gain.