SEC accused the Hydrogen platform of illegally distributing securities. Including through Airdrop
The U.S. Securities and Exchange Commission ruled that Airdrop (the free distribution of tokens) are illegal means of distributing securities. The charges against Hydrogen Technology Corporation indicate this. As well as its former CEO Michael Ross Kane and Moonwalkers CEO Tyler Ostern.
An SEC lawsuit says that in 2018, New York-based Hydrogen, which had ceased operations at this point, created a Hydro token. And then publicly distributed it via airdrop. These were rewards to individuals for promoting their token, rewards to employees, and in the form of direct sales on cryptoplatforms. Likewise, the SEC alleges that Hydrogen hired South African firm Moonwalkers after distributing its token. This was done to create the false appearance of market activity regarding Hydro token. As a result of this manipulation, Hydrogen made a profit of more than $2 million.
“Companies cannot avoid applying securities laws by arranging unregistered offers and sales of their securities as rewards, compensation or other similar methods,” said SEC Deputy Director of the Division of Enforcement Carolyn M. Welshahans.
Our experts also noted that SEC has requested injunctions against defendants for participation in certain types of activities. And including the distribution of securities.
Perhaps now we are seeing the first judicial precedent that will allow a complete ban on any Airdrop
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