Hydrogen Technology Corp. and its former CEO will make restitution and pay fines totalling $2.8 million for allegedly running a price-fixing conspiracy.
The US securities regulator and a company accused of manipulating the price of cryptocurrencies settled their seven-month-long legal dispute with a $2.8 million payment.
In a lawsuit brought by the Securities and Exchange Commission (SEC), a New York District Court Judge ruled against Hydrogen Technology Corporation and its former CEO Michael Ross Kane on April 20 and ordered them to pay $2.8 million in remedies and civil penalties.
The total includes more than $1 million in fines and around $1.5 million in “disgorged” profits, which are earned through unlawful conduct. Michael Kane, the CEO of Hydrogen, also agreed to pay a $260,000 individual penalty. Prejudgment interest makes up the remaining sum.
The SEC filed a complaint in September alleging that Kane engaged in a plan to manipulate the volume and price of Hydrogen’s ERC-20 token, Hydro (HYDRO), by using market maker Moonwalkers Trading Limited.
The SEC stated that Kane and Moonwalkers CEO Tyler Ostern attempted “to create the false appearance of robust market activity” after distributing Hydrogen’s Hydro tokens through airdrops, bounty programs, and direct-to-market sales in 2018.
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
In the SEC’s lawsuit, Ostern is accused of selling the tokens in an “artificially inflated market” that enabled Hydrogen to make more than $2 million. One day after the complaint was filed, Ostern consented to resolve it for $41,000.
As a result of the settlement’s terms, Hydrogen and Kane are no longer permitted to contest the allegations made against them by the SEC.
Kane and the company are not allowed to provide any further cryptocurrencies until the Hydro tokens have passed the Howey test and obtained additional SEC permission.
Kane is still entitled to take part in the wider market for cryptocurrencies, which means he is able to purchase and sell crypto assets for his own profit.