- SEC charged Hydrogen token and MoonWalk for using airdrops and reward programs to promote Hydro token.
The SEC(United States Securities and Exchange Commission) has disclosed the charges on Hydrogen Technology Corporation and its market maker Moonwalkers trading Ltd for supposedly implementing a scheme to alter the trading volume and price of Hydro tokens.
In an announcement on Wednesday, 28th September 2022, SEC highlighted that the CEO of Hydrogen, Michael Ross Kane appointed Moonwalkers and its CEO Tyler Ostern “to create the false appearance of robust market activity” after distributing Hydro tokens using airdrops, a reward program, and direct sales during 2018. Michael Ross then sold the tokens in an “artificial inflated market” to Moonwalkers for a profit of over $ 2 million on behalf of Hydrogen.
Chief of the SEC Enforcement Division market abuse unit Joseph Sansone said, “As we allege, the defendants profited from their manipulation by creating a misleading picture of Hydro tokens in the market activity.” Futhure added, “The SEC is committed to ensuring fair markets for all types of securities and will continue to expose and hold market manipulators accountable.”
According to the SEC, the actions of Kane, Ostern, and the companies manipulated the crypto market to violate conditions of US securities laws. The regulators reported that Ostern has agreed to pay more than $40,000 in deferment and interest subject to approval by Federal Court New York, “with civil monetary penalties to be determined later.” The SEC objection pursued similar action against Kane, restricting the former CEO from holding officer and director positions.
Believers in the crypto industry denounced the complaint of the SEC as an example of regulation by enforcement, in this case, claiming the regulators were extending airdrops to its purview.
Head of policy at the crypto advocacy group Blockchain Association underlined, “They say airdrops meet the Howey test’s ‘investment of money prong, even if no one makes an investment and no money changes hands.” He further stated, “The SEC talks a lot about airdrops, but then only seems to argue that distributions via direct sales, bounty programs, and employee compensation are securities transactions.”
Source: https://www.thecoinrepublic.com/2022/10/01/sec-blames-hydrogen-tech-and-it-market-maker-moonwalk-for-manipulating-crypto-market-in-token-scheme/