The Securities and Exchange Commission (SEC) has moved to press charges against market making firm Hydrogen for allegedly manipulating the trading volume of its Hydro token to amass over $2 million from the illegal act.
Hydrogen CEO Michael Kane and Moonwalker CEO Tyler Ostern were also named as accomplices to the crime. The accused reportedly sold unregistered securities token “Hydro” and intentionally pumped its price only to dump it on unsuspecting investors.
According to the filing, Kane and Hydrogen created and sold the Hydro token back in 2018. The tokens were distributed publicly through airdrops, bounty programs, and employee compensation.
Hydrogen colluded with South Africa-based Moonwalker to inflate the trading volume of Hydro token. The pseudo-robust market activity helped Hydrogen cash out over $2 million from investors’ funds.
“As we allege, the defendants profited from their manipulation by creating a misleading picture of Hydro’s market activity. The SEC is committed to ensuring fair markets for all types of securities and will continue to expose and hold market manipulators accountable,” said Sec official Joseph Sansone.
According to the SEC, Moonwalker CEO Tyler Ostern has agreed to pay a fine of $36,750 and is barred from participating in future securities offerings.
Hydrogen, Kane, and Ostern will appear before the federal district court in Manhattan on a later date to defend their case.
Call to register securities
The SEC has called on token issuers, and crypto exchanges offering securities to duly register with the commission to avoid legal battles.
Bloom protocol has complied with the SEC’s directive after it raised $30.9 million from selling unregistered BLT tokens during the 2018 ICO boom.
Chicago Crypto Capital (CCC) has legal battles to settle with the SEC for failing to register its BXY tokens and allegedly defrauding investors of $1.5 million.
Crypto promoter Ian Balina has declined to comply with the SEC after he was accused of receiving payment to promote unregistered tokens of SPRK tokens.