The United States Securities and Exchange Commission (SEC) has won a lawsuit against Hydrogen Technology Corp. and its founder over token manipulation.
SEC accused Hydrogen founder Michael Kane of manipulating the price of Hydro, the company’s native token. In the lawsuit, filed last October in New York, the watchdog alleged that Kane worked with South African market maker Moonwalkers to execute the scheme, netting over $2 million in the process.
A U.S. judge has now ruled in favor of the SEC in a $2.8 million settlement. He ordered Hydrogen to disgorge over $1.5 million, representing net profits gained from the token manipulation, together with a $244,000 prejudgment interest. He also ordered the company to pay over $1 million as a civil penalty.
Kane was ordered to disgorge $53,000, representing the net profits he accrued from the venture and prejudgment interest. He also must fork out $260,000 as a penalty.
The judge also prohibited Kane from being part of any entity that offers securities, participating in securities offerings, or violating the Exchange Act.
Tyler Ostern, the CEO of Moonwalkers, settled for $41,000 with the SEC months ago. He has also been barred from offering digital assets or securities. The SEC had obtained Slack messages in which he had openly confessed to the crime, including one in which he wrote, “Try not to push too hard on selling now, we’ll have plenty of excuses to pump price and sell into the FOMO guys down the road.”
Price manipulation in the digital asset world is nothing new. For years, some of the biggest entities have been accused of propping up the prices of major tokens, including the use of Tether to manipulate BTC.
BTC is possibly still being manipulated even in 2023, believes John Griffin, the University of Texas professor who exposed the USDT-BTC connection five years ago.
“It’s very suspicious. The same mechanism we saw in 2017 could be at play now in the still unreal Bitcoin market,” he told Fortune in February.
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