SEC sues Hydrogen Technology Corp over alleged cryptocurrency manipulation

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SEC sues Hydrogen Technology Corp over alleged cryptocurrency manipulation

In the latest of a string of enforcement actions, the SEC has accused Hydrogen Technology Corp. of manipulating 'crypto asset securities'.

The SEC said the company offered HYDRO token, an unregistered offer and sale of crypto asset securities, in the form of a miniature with a fully diluted market cap of $416,000. The agency alleges that Hydrogen oversaw a scheme to manipulate trade volume and price of HYDRO that netted more than $2.2 million in profits.

The SEC claimed that Tyler Ostern, the CEO of Moonwalkers Trading Limited, was also involved in the alleged scheme.

After issuing the HYDRO token, the SEC alleges that Kane hired Moonwalkers Trading to create the illusion of strong market activity for the HYDRO token, enabling Hydrogen to sell the token into an 'artificially inflated market' for profit.

The complaint cites communication between Ostern and Kane that suggest Moonwalkers Trading attempted to manipulate the price of HYDRO for Kane.

Joseph Sansone, SEC's Enforcement Division's chief executive, said: ''The market activity is on the upswing,'' according to the SEC's Enforcement Division.

The Hydrogen suit has drew fire from crypto experts who argue that the SEC is overstepping its authority by treating tokens issued through airdrops as securities.

Carolyn Welshhans, the associate director of the SEC's Enforcement Division, said the agency has established a new Enforcement Division for the SEC.

While others argue that the SEC is treating Hydrogen's bounty program as a security investment contract, they argue that it is trying to represent a security investment contract rather than an airdrop.

bounties' where users were rewarded with tokens for a promotional action count for that clause. Not the generic airdrop, but rather the generic airdrop, Cochran said in a statement to the New York Times.

t within the scope of the actual Howey analysis, just distributions through bounties and sales, said Jeremy Sklaroff, general counsel of Celestia.

The SEC filed its suit in the U.S. District Court in Manhattan. The complaint alleges that Hydrogen, Kane, and Ostern violated the securities law by breaching the register, antifraud, and market manipulation provisions.

Ostern has agreed to a $36,750 fine plus prejudgment interest of $5,118, and future monetary penalties determined by the court in exchange for admitting no wrongdoing. Ostern also agreed to prohibiting him from participating in future offers of securities or penny stocks.

The SEC is seeking judgment over Kane, including an order to disgorge ill-gotten gains, civil monetary penalties, and enjoinments prohibiting him from engaging in offers of crypto securities or other offerings or acting as a director or executive in the future.