Just-In: U.S. SEC Cracks Down On Crypto Firm, Secures Historic $2.8 Mn Settlement

Crypto News: A lawsuit by the U.S. SEC that dates back to September of 2022 against a crypto firm, has finally ended in a settlement worth $2.8 million. The lawsuit in question charged Hydro Technology Corp. and its former CEO Michael Ross Kane for their roles in effectuating the unregistered offers and sales of crypto securities called “Hydro”. Additionally, they were alleged to perpetrate a scheme to manipulate the trading volume and price of those securities, which generated more than $2 million for Hydrogen.

SEC Settles Big With Hydrogen

On Thursday, a New York federal judge approved a settlement agreement between the SEC and Miami-based Hydrogen Technology Corp. Co-founder and former CEO Michael Kane also consented to end the legal dispute. In September, the regulatory body filed a lawsuit against two individuals, alleging that they had paid a third party to manipulate trade of the company’s Hydro token in order to artificially boost its price. The day after the complaint was brought forward, the third party in question, Tyler Ostern, reached an agreement to settle the case for $41,000.

As part of the settlement, Hydrogen has consented to pay a total of nearly $2.8 million, comprised of nearly $1.5 million in disgorged profits — which refers to the profits yielded from illegal or wrongful conduct — a penalty of more than $1 million, and prejudgment interest. Michael Kane, on the other hand, has agreed to pay a fine of approximately $260,000.

Strict Terms Set For Hydrogen

Both the corporation and Kane are bound by the conditions of the settlement, which stipulates that they cannot confirm nor refute the claims that have been leveled against them. Additionally, they will not be allowed to sell any additional cryptocurrencies unless they have passed a Howey test and received SEC approval. However, Kane will still be able to engage in the broader crypto market, where he could continue trading cryptocurrencies for himself.

According to the complaint filed by the SEC, Michael Kane, who also controlled Hedgeable Inc — an SEC registered investment adviser — needed to obtain fresh capital, which led to the formation of Hydrogen in the peak bull market of December 2017. On January 2018, Hydrogen minted more than 11 billion Hydro tokens which were distributed through giveaways to its employees, retail investors and to those who promoted the project as a reward.