The Securities and Exchange Commission (SECI has filed charges against The Hydrogen Technology Corporation, former CEO, Michael Ross Kane, and Tyler Ostern, the CEO of Moonwalkers Trading Limited, for allegations regarding the sale of unregistered “crypto asset securities” of Hydro. The SEC also alleges that the defendants pursued a plot to manipulate the trading of Hydro.
The SEC’s complaint claims that starting in January 2018, Kane and Hydrogen created its Hydro token and then publicly distributed the token through various methods, including an airdrop, bounty programs, employee compensation, and direct sales on trading platforms.
The SEC’s complaint also alleges that, following distribution, Kane and Hydrogen hired Moonwalkers, to “create the false appearance of robust market activity for Hydro.” Effectively, the SEC alleges that Hydro traded in an artificially inflated market with defendants garnering over $2 million in gains.
Carolyn M. Welshhans, Associate Director of the SEC’s Enforcement Division, commented on the enforcement action:
“Companies cannot avoid the federal securities laws by structuring the unregistered offers and sales of their securities as bounties, compensation, or other such methods. As our enforcement action shows, the SEC will enforce the laws that prohibit such unregistered fund-raising schemes in order to protect investors.”
The SEC’s complaint has been filed in federal district court in Manhattan. The charges claim that Hydrogen, Kane, and Ostern violated the registration, antifraud, and market manipulation provisions of the securities laws and seeks permanent injunctive relief, conduct-based injunctions, disgorgement with prejudgment interest, civil penalties, and, as to Kane, an officer and director bar.
Without admitting or denying the allegations, Ostern has consented to a judgment, subject to court approval, permanently enjoining him from violating these provisions and participating in future securities offerings and ordering him 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. Ostern has also agreed to an administrative order imposing a collateral industry bar and penny stock bar.