By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
P9O Newsletter
Join Us!

Subscribe to our newsletter and never miss our investigative stories, breaking news, podcasts etc..

Zero spam, Unsubscribe at any time.
  • Home
  • Nigeria
  • Politics
  • Metro
  • World
  • Lifestlye
  • Football
  • 2023 Election
Reading: SEC alleges fintech and ‘market maker’ firms manipulated crypto market in token scheme
Prime 9ja Online
Prime 9ja Online Prime 9ja Online
Aa
  • Africa
  • Business
  • Football
  • Metro
  • Nigeria
  • Opinion
  • Politics
  • Technology
Search
  • Categories
  • _Football
  • _Lifestyle
  • _World
  • _Metro
  • _Politics
  • _Nigeria
  • Pages
  • _About Us
  • _Contact Us
  • _Privacy Policy
Follow Us
Cryptocurrency

SEC alleges fintech and ‘market maker’ firms manipulated crypto market in token scheme

In relation to an alleged scheme to manipulate the trading volume and price of Hydro tokens, the United States Securities and Exchange Commi...

Chima Joseph Ugo
Chima Joseph Ugo - Editor-in-chief September 29, 2022
Updated September 29, 2022 at 4:37 PM
Share
SEC alleges fintech and ‘market maker’ firms manipulated crypto market in token scheme
SHARE
SEC alleges fintech and ‘market maker’ firms manipulated crypto market in token scheme
In relation to an alleged scheme to manipulate the trading volume and price of Hydro tokens, the United States Securities and Exchange Commission, or SEC, has filed charges against Hydrogen Technology Corporation and its market marker Moonwalkers Trading Limited.

Following the distribution of Hydro tokens through an airdrop, bounty schemes, and direct sales in 2018, the SEC claimed that former Hydrogen CEO Michael Ross Kane engaged Moonwalkers and its CEO Tyler Ostern "to create the false appearance of substantial market activity." Then, on behalf of Hydrogen, Kane had Moonwalkers sell the tokens in the "artificially inflated market" for a profit of more than $2 million.

“As we allege, the defendants profited from their manipulation by creating a misleading picture of Hydro’s market activity,” said Joseph Sansone, chief of the SEC Enforcement Division’s market abuse unit. “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, Kane’s, Ostern’s, and the companies’ actions constituted manipulation of the crypto market, violating provisions of U.S. securities laws. The regulator reported Ostern had consented to pay more than $40,000 in disgorgement and interest, subject to approval by a New York federal court “with civil monetary penalties to be determined at a later date.” The SEC’s complaint sought similar actions against Kane, as well as having the former CEO barred from holding officer and director positions.

Many in the crypto space criticized the SEC complaint as an example of regulation by enforcement — in this case, claiming the regulator was extending airdrops to its purview.

“They say airdrops meet the Howey test’s ‘investment of money’ prong, even if no one makes an investment and no money changes hands,” said Jake Chervinsky, head of policy at the crypto advocacy group Blockchain Association. “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.”

Others suggested that while the SEC’s actions may have been seemingly par for the course on crypto enforcement, they may not have necessarily been targeting token airdrops:

Though the SEC has pursued many enforcement actions against initial coin offerings among crypto firms, the regulator’s stance on airdrops’ role in alleged token schemes is unclear. Commissioner Hester Peirce said in a February 2020 speech that the SEC has hinted a token airdrop “might constitute an offering of securities.”

“Since the SEC has found that some tokens can be securities, if you are considering using an airdrop token distribution be warned that even giving away tokens is not necessarily free from scrutiny under securities law,” said crypto lobbying group Coin Center’s research director Peter Van Valkenburgh in a 2017 blog.
Tags: Cryptocurrency

Sign Up For Daily Newsletter

Be keep up! Get the latest breaking news delivered straight to your inbox.
By signing up, you agree to our Terms of Use and acknowledge the data practices in our Privacy Policy. You may unsubscribe at any time.
Share this Article
Facebook WhatsApp TwitterEmail Print

You Might Also Like

Facebook Like
Twitter Follow
Pinterest Pin
Telegram Subscribe
Prime 9ja Online

Subscribe to our newsletter to receive our latest updates instantly on your email.

About

  • About Us
  • Privacy Policy
  • Terms
  • Disclaimer
  • Fact-Checking Policy
  • Code of Ethics
  • Corrections and Correctives
  • Editorial Integrity
  • Ethical Conduct
  • Funding

Connect

  • Contact Us
  • Advertise
  • Submit a Tip

© 2025 Prime 9ja Online Media - All Rights Reserved.

Follow Us