SEC charges Hydrogen Technology for selling unregistered securities
The SEC has filed charges against Hydrogen Technology Corporation and former chief executive Michael Ross Kane for alleged sales of unregistered “crypto asset securities” in the form of Hydro tokens.
See related article: SEC’s Gensler says proof-of-stake cryptocurrencies may be securities
Moonwalkers Trading Limited CEO, Tyler Ostern, is also being charged for allegedly manipulating markets to help Hydrogen sell the tokens for US$2.2 million in profits.
In 2018, Hydrogen minted over 11 billion Hydro tokens for fundraising purposes and distributed them as airdrops, bounties, and employee compensation.
Airdrops and bounties are promotional token distribution methods that aim to incentivize early adopters with free tokens.
Hydrogen reportedly began selling tokens once Hydro was listed on trading platforms “including two popular, high-volume platforms, one of which is based in the United States,” according to the SEC.
“You don’t even get to the Howey test until you determine there was an offer or sale. How is a free airdrop an offer or sale?” securities law professor at George Mason University J.W. Verret asked on Twitter.
The SEC is currently involved in several high-profile crypto cases including Ripple and LBRY.
See related article: SEC, Ripple seek summary judgment in attempt to speed up XRP lawsuit