Hydrogen Alleged of Breaking SEC’s Law.

The US Securities and Exchange Commission (SEC) has instituted an action against Hydrogen and its market maker, Moonwalkers, for allegedly involving in unregistered securities and artificially inflating the token’s price.

The SEC accused the two firms and their executives of breaking the securities laws’ registration, anti-fraud, and market manipulation provisions. The securities watchdog also asked for permanent injunctive relief, conduct-based injunctions, disgorgement with prejudgment interest, and civil penalties, among other remedies.

According to the official press release, The Hydrogen Technology Corp, its former chief executive officer, Michael Ross Kane, and Tyler Ostern, the CEO of Moonwalkers Trading Ltd; are aimed for violations regarding selling tokens identified as securities by the SEC into a market artificially inflated using bots.

The agency initially shared the project’s native “Hydro” tokens with investors through airdrops, bounty programs, and employee compensation.

The SEC complaint further alleges that after distributing the tokens, Kane and Hydrogen onboarded the South African firm, Moonwalkers in October 2018. The SEC alleges that they did this to “create the false appearance of robust market activity” for the token by leveraging its customized trading software or “bot” and sold it into that artificially inflated market for profit on Hydrogen’s behalf.

According to the agency’s estimates, Hydrogen generated over $2 million. Carolyn M. Welshhans, Associate Director of the SEC’s Enforcement Division, stated that companies could not avoid the federal securities laws by structuring the unregistered offers and sales of their securities as bounties, compensation, or other such methods.

The associate director stated that the SEC would enforce laws prohibiting unregistered fund-raising schemes to protect investors.

Although Hydrogen believes the SEC’s case “wholly lacks merit” and plans to follow the legal route, the latest complaint may address the issue of the legality of airdrops and bounty campaigns.