The United States Securities and Exchange Commission (SEC) has reportedly won over a crypto firm in a legal battle with the latter making a settlement with the former. The lawsuit started in September last year with the SEC charging Hydrogen Technology Corporation and former chief executive officer Michael Ross.
The New York District Court brough the judgment on April 20 and ordered the fintech company to pay a fine of 2.8 Million USD to the SEC, in remedies and civil penalties.
The regulator accused the crypto firm for sales of native token Hydro (HYDRO), which was considered as unregistered crypto security. In addition, the charges also include the allegation of initiating a scheme for trading volume and price manipulation of sold securities. This way, Hydrogen made about 2 Million USD.
Out of 2.8 Million USD fine, about 1.5 Million USD worth funds from unlawfully generated profits and about 1 Million USD would be a penalty. While CEO Michael Kane would be paying an individual fine of 260,000 USD. Rest amount is reported to be counted within the prejudgement interest.
According to the SEC filed complaint, Kane used the market maker of Hydrogen, Moonwalkers Trading Limited and conducted the manipulation of the price and volume of native ERC-20 token Hydro.
In addition, the agency claimed that along with Hydrogen CEO, Moonwalkers CEO Tyler Ostern was also the part of the activity of showcasing misleading “robust market activity” of their token.
Further the complaint noted that the market maker’s executive was involved in the inflating of the market artificially. The action ended up generating 2 Million USD worth profit for Hydrogen. However, soon after the SEC filed the complaint, Osterns reportedly agreed for settlement with the agency for 41,000 USD.
Following the judgment, both the executives will now be obliged by the settlement conditions—stopping them from getting involved in the similar activities. They would not be able to sell the Hydro tokens until passing the Howey test and SEC’s approval. However, Kane is allowed to participate in cryptocurrency trades, implying to purchase and sell cryptocurrencies but only for personal use.
Earlier the regulator was reportedly charged crypto exchange Kraken for crypto staking services offering where the company had to pay 30 Million USD in fine. Though the action was criticized by the broader crypto community, the agency was not seen to deter from its stance towards staking.
Leading US crypto exchange Coinbase voluntarily published a detailed report on staking services, explaining its utilities and unlikeliness to be treated as an illegal activity to the SEC. After several days, the crypto exchange reported receiving Well Notice from the agency.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/04/24/crypto-firm-hydrogen-tech-to-pay-sec-2-8m-fine-for-token-exploit/