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Court Charges 5 in $2M HYDRO Token Manipulation Case, SEC Records Victory

2 mins
Updated by Kyle Baird
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In Brief

  • Five people have been charged in connection with an alleged conspiracy employing the ERC-20 Hydro (HYDRO) token.
  • The scheme reportedly resulted in more than $2 million in losses for investors.
  • The court has accused the defendants of manipulating the market for HYDRO by creating a fake demand and pushing high-price purchases.
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Five individuals have been handed massive fines for ‘conspiring to manipulate the market’ using the ERC-20 Hydro (HYDRO) token.

The scheme reportedly resulted in more than $2 million in investor losses.

What Are the Charges?

The authorities in Miami made a sealed indictment public on Tuesday. It accused two Americans and a South African of market manipulation. Additionally, authorities have named two other people in separate filings with the Southern District of Florida for participation.

The Hydrogen Technology Corporation’s virtual HYDRO asset was said to be used in multi-chain DeFi and GameFi protocols.

The court has accused the defendants of manipulating the market for HYDRO by creating a fake demand. It is accused of pushing high-priced purchases. In addition, they reportedly used a trading bot to place orders they did not mean to fulfill. As per the authorities, the fake trades created an illusion of market activity.

The conspirators made $2 million in profits from their sales of HYDRO at higher prices, DOJ said in the statement.

The charged executives include the co-founder and CEO of Hydrogen Technology, the Chief of Financial Engineering for the same company, and the Chief Technology Officer for Moonwalkers Trading Limited.

Moonwalkers Trading is allegedly the mastermind behind the trading bot. Meanwhile, the former CEO of Moonwalkers and a blockchain engineer at Hydrogen Technology were also charged for participating in the scheme.

SEC Victory in HYDRO Case

In September 2022, the securities regulator announced charges against the defendants. On April 20, it reached the courts and ended in a victory for the SEC. The court stated that Hydrogen Technology and executive Michael Kane are liable to pay disgorgement, prejudgment interest, and a civil penalty in the case.

The ruling requires Hydrogen Technology Corporation to pay a total of nearly $2.8 million. Meanwhile, Kane must also pay $260,000 to the SEC across four installments.

The FBI has reportedly taken over the case, per the Department of Justice.

The SEC has recently handed many big crypto businesses fines. Allegations include insider trading, securities fraud, and betrayal of investor confidence, among other charges.

The agency and Ripple have been in a legal conflict for over two years. The payments company has also been going after the watchdog. It is claiming the SEC failed to provide the sector with fair notice about its position on cryptocurrencies and securities. The SEC has already faced criticism from many stakeholders for its enforcement action. 

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Shraddha Sharma
Shraddha is an India-based journalist who worked in business and financial news before diving into the crypto space. As an investment enthusiast, she has also has a keen interest in understanding crypto from a personal finance standpoint.
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