SEC alleges fintech and "market maker" companies manipulated the crypto market as part of a token scheme
While the SEC has pursued numerous enforcement actions related to initial coin offerings, the regulator's position on the role of airdrops in alleged token systems is unclear.< /p>
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The United States Securities and Exchange Commission, or SEC, has announced charges against Hydrogen Technology Corporation and its market player Moonwalkers Trading Limited for allegedly carrying out a scheme to manipulate the trading volume and price of tokens Hydro.
In a Sept. 28 announcement, the SEC said former Hydrogen CEO Michael Ross Kane hired Moonwalkers and its CEO Tyler Ostern "to create the false appearance of robust market activity" following the distribution of Hydro tokens via airdrop, bounty programs and direct sales in 2018. Kane then instructed Moonwalkers to sell the tokens in the "artificially inflated market" for over $2 million in profit on Hydrogen's behalf.
"As we allege, the defendants profited from their manipulation by creating a misleading image of Hydro's market activity," said Joseph Sansone, head of the division's market abuse unit. SEC law enforcement. "The SEC is committed to ensuring fair markets for all types of securities and will continue to expose and hold accountable market manipulators."
According to the SEC, the actions of Kane, Ostern and the companies constituted manipulation of the crypto market, violating the provisions of US securities laws. The regulator reported that Ostern had agreed to pay more than $40,000 in refunds and interest, subject to approval by a federal court in New York "with civil monetary penalties to be determined at a later date." The SEC complaint sought similar actions against Kane, as well as barring the former CEO from holding executive and director positions.
Many in the crypto space criticized the SEC complaint as an example of regulation by enforcement – in this case, saying the regulator was extending airdrops to its jurisdiction.
"They say the airdrops meet the 'investment of money' part of the Howey test, even though no one is investing and there is no change of money...
While the SEC has pursued numerous enforcement actions related to initial coin offerings, the regulator's position on the role of airdrops in alleged token systems is unclear.< /p>
New
The United States Securities and Exchange Commission, or SEC, has announced charges against Hydrogen Technology Corporation and its market player Moonwalkers Trading Limited for allegedly carrying out a scheme to manipulate the trading volume and price of tokens Hydro.
In a Sept. 28 announcement, the SEC said former Hydrogen CEO Michael Ross Kane hired Moonwalkers and its CEO Tyler Ostern "to create the false appearance of robust market activity" following the distribution of Hydro tokens via airdrop, bounty programs and direct sales in 2018. Kane then instructed Moonwalkers to sell the tokens in the "artificially inflated market" for over $2 million in profit on Hydrogen's behalf.
"As we allege, the defendants profited from their manipulation by creating a misleading image of Hydro's market activity," said Joseph Sansone, head of the division's market abuse unit. SEC law enforcement. "The SEC is committed to ensuring fair markets for all types of securities and will continue to expose and hold accountable market manipulators."
According to the SEC, the actions of Kane, Ostern and the companies constituted manipulation of the crypto market, violating the provisions of US securities laws. The regulator reported that Ostern had agreed to pay more than $40,000 in refunds and interest, subject to approval by a federal court in New York "with civil monetary penalties to be determined at a later date." The SEC complaint sought similar actions against Kane, as well as barring the former CEO from holding executive and director positions.
Many in the crypto space criticized the SEC complaint as an example of regulation by enforcement – in this case, saying the regulator was extending airdrops to its jurisdiction.
"They say the airdrops meet the 'investment of money' part of the Howey test, even though no one is investing and there is no change of money...
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