SEC Files Charges Against Hydrogen Technology And Ex-CEO

According to the lawsuit by SEC, Kane and Hydrogen, financial technology business with headquarters in New York, established the Hydro token in January 2018 and publicly disseminated it via diverse methods.

Kane and Hydrogen Hired Moonwalkers

The complaint also claims that after delivering the token in different ways, Kane and Hydrogen contracted with Moonwalkers, a company located in South Africa, in October 2018. The negotiation with Moonwalkers was to employ its specialized trading software or bot to establish the false appearance of active market activity for Hydro, which was then sold into the overinflated market on Hydrogen's behalf for revenue. Due to the defendant's alleged actions, Hydrogen reportedly made more than $2 million in profits.

Carolyn M. Welshhans, Associate Director of the SEC's Enforcement Division, stated that companies could not circumvent the federal securities laws by framing unauthorized offers and trades of their securities as prizes, remuneration, or other similar acts. He further claimed that, according to the enforcement actions, the SEC would uphold the rules that confine such unregulated fund-raising methods to safeguard investors.

Accusations By SEC

Hydrogen, Kane, and Ostern were accused of breaking the securities laws' enrollment, anti-fraud, and unethical marketing provisions in the SEC's complaint, which was submitted to the federal district court in Manhattan. The Securities and Exchange Commission is also asking for a permanent preliminary injunction, conduct-based injunctions, disgorgement with prejudgment interest, civil fines, and, in the case of Kane, an officer and director bar.

Ostern agreed to a judgment, subject to court approval, that permanently prohibits him from breaking these clauses and taking part in future securities offerings. Ostern has also consented to the imposition of a penny stock and collateral industry bar by administrative order.