After a seven-month-long legal battle, a firm accused of manipulating cryptocurrency prices has agreed to pay $2.8 million. On April 20, a New York District Court Judge ruled against Hydrogen Technology Corporation and its former CEO Michael Ross Kane, ordering them to pay remedies and civil penalties.
The sum consists of around $1.5 million in disgorged profits, referring to gains made from illegal activities, and a penalty of over $1 million. Additionally, Kane agreed to pay an individual fine of approximately $260,000, and the remaining amount is prejudgement interest.
In September 2022, the Securities and Exchange Commission (SEC) filed a complaint alleging that Kane used Hydrogen’s market maker Moonwalkers Trading Limited to manipulate the volume and price of its ERC-20 token Hydro (HYDRO). The SEC claimed that Kane and Moonwalkers CEO Tyler Ostern worked to fabricate the impression of robust market activity following the distribution of Hydrogen’s Hydro tokens through airdrops, bounty programs, and direct-to-market sales in 2018.
The SEC claimed that Ostern sold the tokens in an artificially inflated market, resulting in Hydrogen making over $2 million in profit. One day after the complaint was filed, Ostern agreed to settle the case for $41,000.
Both Hydrogen and Kane are now obligated to abide by the terms of the settlement, which prohibit them from disputing the SEC’s allegations further. Kane and the firm are not allowed to sell any additional cryptocurrency until the Hydro tokens pass the Howey test and receive further approval from the SEC.
Kane is still allowed to participate in the broader cryptocurrency market, enabling him to purchase and sell crypto assets for personal benefit.