SEC Charges Hydrogen Technology for Market Manipulation of Crypto Asset Securities

The company tried to inflate price creating the false appearance of robust market activity for Hydro through the use of bot.

The U.S. Securities and Exchange Commission announced charges against fintech enablement platform Hydrogen Technology Corporation (HTC) for effectuating the unregistered offers and sales of crypto asset securities and perpetrating a scheme to manipulate the trading volume and price of those securities, which yielded more than $2 million for the company.

The SEC’s complaint, filed in federal district court in Manhattan, charges Hydrogen, its former CEO Michael Ross Kane and Tyler Ostern, the CEO of Moonwalkers Trading Limited (a self-described “market making” firm) with violating the registration, antifraud, and market manipulation provisions of the securities laws.

SEC alleges that starting in January 2018, Kane and Hydrogen created and then publicly distributed its token Hydro (HYDRO) through airdrop, bounty programs, employee compensation and direct sales on crypto asset trading platforms. After distributing the token, Kane and Hydrogen hired Moonwalkers in October 2018 to create the false appearance of robust market activity for Hydro through the use of bot and then selling Hydro into that artificially inflated market for profit on Hydrogen’s behalf. As a result, Hydrogen allegedly reaped profits of more than $2 million.

Without admitting or denying the allegations, Ostern has consented to pay $36,750 in disgorgement and prejudgment interest of $5,118, with civil monetary penalties to be determined at a later date by the court.

“Companies cannot avoid the federal securities laws by structuring the unregistered offers and sales of their securities as bounties, compensation, or other such methods,” said Carolyn M. Welshhans, Associate Director of the SEC’s Enforcement Division.  “As our enforcement action shows, the SEC will enforce the laws that prohibit such unregistered fund-raising schemes in order to protect investors.”