SEC accuses Hydrogen and its previous CEO of manipulating the crypto market


In another cryptocurrency-related lawsuit, the SEC has accused Hydrogen, its former CEO, and its market maker of crypto asset securities manipulation.

Hydrogen, its former CEO Michael Ross Kane, and Tyler Ostern, CEO of market-making business Moonwalkers Trading, have all been charged by the SEC for “violating the registration, antifraud, and market manipulation sections of the securities laws,” as stated in a news statement from the agency dated September 28.

In addition, it describes the token distribution as “unregistered offers and sales of crypto asset securities” and asserts that it was part of “a plan to influence the trading volume and price of such securities.”

As alleged in the SEC’s complaint, Hydrogen “earned itself more than $2 million” by “producing the false impression of vigorous market activity for Hydro via the use of its proprietary trading software (…) and then selling Hydro into that falsely inflated market.”

Carolyn M. Welshhans, Associate Director of the Enforcement Division of the SEC, explains: “Companies cannot circumvent federal securities laws by framing unregistered offers and sales of their securities as bonuses, pay, or other similar schemes. To safeguard investors, the SEC will pursue the rules prohibiting such unregistered fund-raising activities.”

Notably, these claims are identical to those made against Ripple Labs by the SEC, which accuses the blockchain startup of unlawfully selling XRP coins since the agency considers them to be subject to securities regulations.

As reported by Finbold, Ripple’s legal team recently submitted a motion to dismiss the lawsuit, stating that the tokens it issued cannot be called securities due to the absence of an “investor contract” that would offer investors rights or obligate the issuer to operate in their best interests.

Also Read: Ethereum co-founder expresses worry regarding ETH’s centralization after Merge

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