SEC v. The Hydrogen Technology Corporation; Michael Ross Kane; and Tyler Ostern, No. 1:22-cv-08284, Southern District of New York (Oct. 6, 2022) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

U.S. SECURITIES AND EXCHANGE
COMMISSION,

                                          Plaintiff,

     -against-

THE HYDROGEN TECHNOLOGY
CORPORATION, MICHAEL ROSS KANE,
AND TYLER OSTERN,

                                          Defendants.

 Case No. 22-cv-08284

                  Jury                  Trial                  Demanded

COMPLAINT
Plaintiff U.S. Securities and Exchange Commission (the “SEC”), for its Complaint,
alleges as follows:
SUMMARY
1. This enforcement action arises from the unregistered offers and sales of crypto
asset securities and market manipulation scheme by Defendants The Hydrogen Technology
Corporation (“Hydrogen”), a financial technology (“fintech”) company based in Miami, Florida,
its former President and CEO, Michael Ross Kane, and Tyler Ostern, President and CEO of
Moonwalkers Trading Limited (“Moonwalkers”).
2. From January 2018 through April 2019 (the “Relevant Period”), Hydrogen and
Kane, offered and sold crypto asset securities called Hydro tokens (“Hydro”) and privately hired
Ostern to fraudulently manipulate the price and volume of Hydro tokens traded on crypto asset
trading platforms so that Hydrogen could sell its own Hydro tokens at a greater profit.  As a

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result of these unregistered offers and sales and fraudulent manipulation of the Hydro market,
Hydrogen reaped profits of over $2.2 million.
3. Hydrogen was formed in December 2017, when it was created out of, and
obtained all of the technology, intellectual property, and employees of, Hedgeable, Inc., an SEC-
registered investment adviser, at which Kane was President and CEO.  Kane directed the creation
of Hydrogen to raise much-needed capital, including through a token offering, sale, or
distribution.
4. In January 2018, Hydrogen created, or “minted,” 11,111,111,111 Hydro tokens
and devised a plan to raise capital for Hydrogen by publicly distributing, offering, and selling
Hydro to create and grow a market for Hydro so that Hydrogen and Kane could profit from the
sale of the company’s own Hydro on crypto asset trading platforms.  In an effort to create a
consumptive use for the Hydro token, Hydrogen and Kane planned to create a blockchain-based
software ecosystem called the “Hydrogen platform” and to develop and release so-called “Hydro
protocols” on that platform, which users would ostensibly use by paying with Hydro tokens.
5. Hydrogen and Kane carried out their plan to distribute, offer, and sell Hydro in
four overlapping phases:  (1) in January and February 2018, Hydrogen distributed Hydro through
an “airdrop” or public “giveaway” of tokens; (2) in February 2018 and, again, beginning in May
2018, Hydrogen held two bounty programs that provided Hydro to participants in exchange for
completing tasks promoting the Hydro token and the Hydrogen platform; (3) between February
and October 2018, Hydrogen distributed Hydro tokens to the company’s employees as
compensation; and (4) from May 2018 through April 2019, Hydrogen and Kane, including
through Ostern, executed controlled sales of the company’s Hydro on crypto asset trading
platforms.

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6. Kane began selling the company’s Hydro through crypto asset trading platforms
in May 2018, but soon after learned that selling a significant volume of Hydro would depress the
token’s price and hinder his efforts to raise much-needed capital for Hydrogen.  As a result, in
October 2018, Kane privately hired and directed Ostern and his company, Moonwalkers, a self-
described crypto asset “market maker,” to manipulate Hydro’s trading price and volume so that
the company’s Hydro sales would be more profitable.  Moonwalkers did so by creating the false
appearance of robust Hydro trading and artificially propping up the token’s price.
7. Specifically, at Kane’s direction, Ostern used a customized trading bot (a
computer program that automates trades) to sell the company’s Hydro through Kane’s personal
trading accounts on crypto asset trading platforms.  Among other manipulation tactics, Ostern
placed and canceled both buy and sell orders at random increments to artificially inflate the
Hydro token’s trade volume and price, thereby enabling sales of the company’s Hydro to be
more profitable.
8. Ostern provided Kane and Hydrogen with regular updates on his market
manipulation efforts.  For example, on October 11, 2018, just days after the Hydro market
manipulation began, Ostern told Kane that he was “starting off slow, trying to keep the sell
pressure minimal until [he could] build enough capital to really get the market moving upward”
and indicated that they would “have plenty of excuses to pump price and sell into the FOMO
[fear of missing out] guys down the road.”  Two weeks later, Ostern told Kane about his
“volume shenanigans” on a popular, high-volume crypto asset trading platform, and bragged that
it had taken his bot “about 3 seconds” to generate the illusion that “a million” Hydro tokens had
been bought and sold—“[a]round half” of which Ostern admitted was “fake.”

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9. In addition, and as set forth more fully herein, the Hydro distributed by Hydrogen
and Kane through the bounty programs, employee compensation, and sales in the crypto asset
trading market, including through Ostern, were offered and sold as investment contracts, and
therefore were securities whose offer or sale required registration with the SEC unless an
exemption from registration was available.  Hydrogen and Kane did not file a registration
statement with the SEC for their offers or sales of Hydro, and no exemption from registration
was available.
10. By engaging in the misconduct described herein, the Defendants violated
numerous provisions of the federal securities laws, including certain registration, antifraud, and
market manipulation provisions, as detailed below.
NATURE OF PROCEEDING AND RELIEF SOUGHT
11. The SEC brings this action pursuant to the authority conferred upon it by Section
20(b) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77t(b)] and Section 21(d) of
the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78u(d)].
12. The SEC seeks a final judgment against Hydrogen and Kane:  (a) permanently
enjoining them from engaging in acts, practices, and courses of business alleged herein;
(b) ordering them to disgorge, on a joint and several basis, their ill-gotten gains and pay
prejudgment interest thereon pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15
U.S.C. § 78u(d)(5) and (d)(7)]; (c) imposing civil money penalties on them pursuant to Section
20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15
U.S.C. § 78u(d)(3)]; (d) permanently enjoining Hydrogen and Kane from participating in an
offering of crypto asset securities or other securities and from violating the federal securities
laws alleged in this Complaint, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C.

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§ 78u(d)(5)]; and (e) prohibiting Kane from acting as an officer or director of any public
company, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section
21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)].
13. The SEC also seeks a final judgment against Ostern:  (a) permanently enjoining
him from engaging in acts, practices, courses of business, and violations alleged herein;
(b) ordering him to disgorge his ill-gotten gains and pay prejudgment interest thereon pursuant to
Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(5) and (d)(7)];
(c) imposing civil money penalties on him, pursuant to Section 20(d) of the Securities Act [15
U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and
(d) permanently enjoining Ostern from participating in an offering of crypto asset securities or
other securities, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].
JURISDICTION AND VENUE
14. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, Sections
20(b), 20(d) and 22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections
21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  Defendants,
directly and indirectly, have made use of the means or instruments of transportation or
communication in, and the means and instruments of, interstate commerce, or of the mails, in
connection with the transactions, acts, practices, and course of business alleged herein.
15. Venue in the Southern District of New York is proper pursuant to Section 27 of
the Exchange Act [15 U.S.C. § 78aa].  Defendants conducted certain transactions, acts, practices,
and courses of business constituting the violations alleged herein within this district, including
offering and selling Hydro while in this district and to U.S. persons located in this district.  In
addition, Defendants minted, distributed, marketed, listed on crypto asset trading platforms,

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and/or coordinated the offers and sales while in this district, and Hydrogen and Kane did so from
Hydrogen’s office, which was located in this district during the Relevant Period.
DEFENDANTS
16. The Hydrogen Technology Corporation is a privately-held Delaware
Corporation and currently is headquartered in Miami, Florida.  During the entire Relevant
Period, Hydrogen was headquartered in New York, New York.  Hydrogen is a spin-off of
Hedgeable, Inc. (“Hedgeable”), which was also a Delaware corporation headquartered in New
York, New York.  Hedgeable was registered with the SEC as an internet investment adviser from
2009 through December 2018, when its registration was terminated.  On December 21, 2018,
Hedgeable settled with the SEC for violations of Sections 204, 206(2), and 206(4) of the
Investment Advisers Act of 1940 and certain Rules thereunder, in connection with the
dissemination of false and misleading marketing materials and performance data, and agreed to
pay an $80,000 civil penalty.  Hydrogen’s primary business during the Relevant Period was
centered on its application programming interface (“API”) solution, which Hydrogen’s clients,
mainly banks and other financial institutions, pay Hydrogen to use in order to access the
company’s data models for account and portfolio management.
17. Michael Ross Kane, age 37, was Hydrogen’s CEO and Head of Business during
the entire Relevant Period, and until December 2018 was President, CEO, and Head of Business
of Hedgeable.  During the Relevant Period, Kane resided in New York City and, later, Miami
Beach, Florida, where he currently resides.  During the SEC’s investigation that preceded this
action, Kane invoked his Fifth Amendment privilege against self-incrimination, refusing to
answer questions during sworn testimony.

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18. Tyler Ostern, age 28, resides in Coos Bay, Oregon and during the Relevant
Period resided in Charlotte, North Carolina, then Myrtle Beach, South Carolina, and, after that,
West Fargo, North Dakota.  At all times relevant to this Complaint, Ostern was the President,
CEO, and head trader of Moonwalkers, a South African-incorporated company and self-
described “marketing firm” or “market maker” for crypto assets.  Ostern has never been
registered with the SEC in any capacity.
BACKGROUND ON CRYPTO ASSETS
19. The term “crypto asset” (or, sometimes referred to as a “digital asset”) generally
refers to an asset that is issued and transferred using distributed ledger or blockchain technology,
including, but not limited to, so-called “cryptocurrencies,” “coins,” and “tokens.”
1

20. Entities have offered and sold crypto assets in fundraising events, often called
initial coin offerings (“ICOs”), in exchange for consideration.  Generally, crypto assets may
entitle holders to certain rights related to a venture underlying the fundraising event, such as
rights to profits, shares of assets, rights to use certain services provided by the issuer, and/or
voting rights.  Issuers of crypto assets typically release a “whitepaper” or marketing materials
describing the project and the crypto asset.
21. After an initial distribution or sale by the issuer, crypto assets are often tradeable
upon delivery, including on secondary markets on crypto asset trading platforms.  Secondary
market transactions allow investors to buy and resell securities originally sold by an issuer—for
example, on exchanges or crypto asset trading platforms.  Secondary market trading in crypto

1
   A blockchain or distributed ledger is a peer-to-peer database spread across a network, that
records all transactions in theoretically unchangeable, digitally recorded data packages.  The
system relies on cryptographic techniques for secure recording of transactions.  Blockchains or
distributed ledgers can also record “smart contracts,” essentially computer programs designed to
execute the terms of a contract when certain triggering conditions are met.

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assets has grown exponentially, and the announcement of the listing of a crypto asset, including a
crypto asset security, often causes that asset’s price and trading volume to rise.
22. On secondary trading platforms, crypto assets are tradeable for other crypto assets
(such as Bitcoin) or fiat currency, i.e., legal tender issued by a country.
23. The offers and sales of crypto assets must be registered with the SEC if they are
offers and sales of securities, which the Securities Act defines to include an “investment
contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a
reasonable expectation of profit derived from the efforts of others.  See SEC v. W.J. Howey Co.,
328 U.S. 293 (1946).
FACTUAL ALLEGATIONS
I. The Formation Of Hydrogen
24. In December 2017, Hedgeable, an investment adviser registered with the SEC,
spun off its fintech business and created a new, independent company called Hydrogen.
25. Prior to creating Hydrogen, Hedgeable had come under increased regulatory
scrutiny, including by the SEC, in connection with Hedgeable’s robo-advisory business.
2
  As a
result, Hedgeable, led by Kane, its CEO and a member of the company’s board of directors
(“Board”), began discussing internally a plan to separate the core of its business (technology,
software, and employees) from its adviser business, in part, to insulate itself from regulatory
oversight.
26. Specifically, in mid-September 2017, Hedgeable began the process of pivoting its
primary business to providing financial institution clients an API solution that would, among

2
  Robo-advisers are digital investment advisers, platforms, or programs that provide
automated or semi-automated investment advisory services, typically driven by algorithms and
with little to no human supervision.

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other functions, secure data used by its clients’ mobile applications in addition to providing
access to its data models for account and portfolio management.  As a part of that process,
Hedgeable proposed creating a spin-off entity called “Hydrogen,” which was the name of the
company’s API solution at the time, into which Hedgeable would transfer all of its intellectual
property.  Around the same time, Kane informed Hedgeable’s Board that the company was going
to run out of cash by November 15, 2017.
27. Creating a spin-off entity (what ultimately became Hydrogen), Kane claimed at a
September 14, 2017 Hedgeable Board meeting, would accomplish three goals:  “1. Protect the IP
and revenue of [the spin-off] entity completely from any regulatory action”; “2. Create fresh
momentum to raise capital, get partners, and press”; and “3. Allow [them] to get involved in
blockchain, ICO, and other areas without being under SEC scrutiny[.]”
28. On or around November 20, 2017, Hydrogen was incorporated in Delaware, and
the following day, Hedgeable transferred all of its technology, intellectual property, employees,
and assets into Hydrogen.  The spin-off by which Hydrogen was formed was completed on or
around December 12, 2017.
II. To Raise Needed Capital, Hydrogen And Kane Considered Fundraising Options,
Including A Token Sale Or Distribution
29. Throughout 2017, Hedgeable faced a worsening financial situation.  By early
December 2017, Hedgeable had defaulted on its payroll obligations, owed its payroll provider
$100,000, and estimated it needed $220,000 to continue its business through mid-December,
when the company anticipated receiving $1.5 million pursuant to a convertible note it had
secured months earlier from a customer agreeing to fund the spin-off entity, Hydrogen.  On
December 4, 2017, Kane told a Hedgeable shareholder that the company was “out of cash, and

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[was] anxiously awaiting the spin-out to be completed in order to receive [an] investment from
[its enterprise customer] for $1.5m in a convertible note.”
30. As a result, and as part of the discussions leading to the decision to spin off and
create Hydrogen, Kane and others at Hedgeable discussed ways to raise capital, including the
creation, public distribution, and sale of a token.
31. Towards the end of 2017, Kane led numerous internal conversations with future
Hydrogen employees, members of Hedgeable’s Board, and investors about Hydrogen’s plan to
sell a crypto asset called “Hydro” to the investing public, through a “token sale.”
32. At Hydrogen’s first Board meeting on January 4, 2018, Kane provided updates on
the Hydro “token sale/distribution” and blockchain project, including that in December 2017
Hydrogen had completed its whitepaper describing the project and the Hydro token
(“Whitepaper”) and demonstration videos.
33. In the same Board update, Kane also presented the Board with “two viable
distribution options” for the tokens after Hydrogen had “developers sign up for the Hydrogen
API”:  (1) a token sale, such as an ICO, or (2) a so-called “airdrop” or public “giveaway.”  Kane
summarized the pros and cons of each option in the following chart:

34. In early 2018, Hydrogen and Kane opted not to pursue a traditional ICO (or label
their offering as an ICO), to avoid “causing SEC problems.”  Instead, and as describe more fully
herein, they devised a plan to raise capital by publicly distributing, offering, and selling Hydro,

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including to U.S. investors, through:  (1) an airdrop; (2) crypto asset “bounty programs”,
(3) Hydrogen employee compensation, and (4) the creation of a robust secondary market on
crypto asset trading platforms to enable Hydrogen to directly offer and sell Hydro to investors.
III. The Hydrogen Platform And The Hydro Protocols
35. As part of its plan to use Hydro to raise capital, Hydrogen proposed integrating
Hydro into a software ecosystem called the “Hydrogen platform.”
36. Hydrogen publicly described the Hydrogen platform on its website and
Whitepaper as an “ecosystem” composed of “four layers”:  (1) the Ethereum blockchain,
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 (2) the
“Hydro protocols,” which were to be smart contracts (e.g., coded software recorded on the
blockchain) to be used for validating user-security and user-identification, (3) applications built
by third-party developers on top of the Hydro protocols, and (4) platforms built by commercial
businesses on top of the preceding three layers.
37. In or around January 2018, Hydrogen announced publicly, on its website and on
its social media pages and channels—all of which were accessible in the United States—that it
planned to develop and release five “Hydro protocols” in successive phases between 2018 and
2020, with each protocol purportedly requiring Hydro to operate.  However, four of the five
Hydro protocols were never finalized and released to the public while Hydrogen was offering
and selling Hydro tokens.

3
  The Ethereum blockchain is an open, or permissionless, blockchain that is a record of
events, and that can allow for the use of “smart contracts.”  Ether (or “ETH”) is the Ethereum
blockchain’s native token.  (Some crypto assets may be “native tokens” to a particular
blockchain—meaning that they are represented on their own blockchain, though other crypto
assets may also be represented on that same blockchain, as is the case with the Ethereum
blockchain.)

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IV. Hydrogen And Kane Publicly Distributed, Offered, and Sold Hydro
38. During the fall of 2017, Kane led the company’s Hydro-creation efforts, which
included closely supervising testing of the Hydro token in a closed-system format, as well as
instructing others to create and review videos explaining how the Hydro token integrated into the
Hydrogen platform.
39. In early January 2018, under Kane’s direction, Hydrogen minted a finite supply of
11,111,111,111 Hydro tokens.  The Hydro token is an ERC-20 standard token on the Ethereum
blockchain.
4

40. In its materials publicly marketing and promoting the Hydro token, Hydrogen and
Kane told potential investors that a significant percentage of minted Hydro would be set aside for
the company and its development team.  For example, in a January 18, 2018 post on Hydrogen’s
thread on bitcointalk.org, Hydrogen stated that 20% of the token supply would be reserved for
the company in “a treasury,” and another 30% would be reserved for the company’s
development team.
41. Later, in a May 18, 2018 post on Hydrogen’s Medium blog, titled “Understanding
The Hydro Token Distribution,” Hydrogen stated that 35% (nearly 3.89 billion Hydro) had been
allocated to the company’s repository and 26% (just over 2.92 billion Hydro) to its current
internal developer team, with another 5% set aside for the company’s future internal
development team.
42. Hydrogen and Kane publicly marketed Hydro as a so-called “utility” token on the
company’s website and its social media pages and channels, initially claiming that it would

4
  ERC-20 is a standard protocol (or technical specification of the type of crypto token)
currently used by a majority of issuers on the Ethereum blockchain to create tokens that are
represented on the Ethereum blockchain.

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function as an “API key” within Hydrogen’s existing non-blockchain API business.  However, at
no point during the Relevant Period, including during the offers and sales of Hydro, could the
token be used within Hydrogen’s existing non-blockchain API.
43. Hydrogen’s and Kane’s plan to distribute, offer, and sell the Hydro token
proceeded in four overlapping phases:
a. The Hydro airdrop was the first phase of Hydrogen’s and Kane’s plan to
publicly distribute, offer, and sell Hydro tokens.  It began in January and ran through February
20, 2018.  Kane directed the marketing and execution of the Hydro airdrop, including directing
the creation of the airdrop application on Hydrogen’s website and providing certain Hydrogen
shareholders and others with instructions on how to sign up for the airdrop.  Hydrogen’s and
Kane’s goal in carrying out the airdrop was to widely disseminate and promote the Hydro token
to create a broad secondary market for Hydro, into which the company could later sell its Hydro
for profit.  Hydrogen never placed any restriction on the resale of airdropped, or indeed any
other, Hydro tokens.  On February 19 and 20, 2018, Hydrogen airdropped, or distributed,
approximately 2.6 billion Hydro tokens to over 11,000 “developers.”
b. In late February and again in May 2018, Hydrogen offered Hydro through
bounty programs, pursuant to which Hydrogen paid Hydro to participants in exchange for
completing bounty tasks promoting Hydro and the Hydrogen platform.
c. From mid-February through October 2018, Hydrogen and Kane
distributed approximately 2.9 million Hydro to Hydrogen employees as part of their employment
compensation.
d. Just days after the airdrop concluded in February 2018, Hydrogen and
Kane began their efforts to have Hydro “listed,” or made available for trading, on various crypto

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asset trading platforms.  Hydrogen and Kane publicly announced each new listing on the
company’s social media page and channels and in emails to Hydro token holders.  Beginning in
May 2018, Kane began selling Hydro from the company’s repository to raise much-needed
capital, and, in October 2018, hired Moonwalkers to sell Hydro on crypto asset trading
platforms, to keep the price of the token afloat and ensure that the company’s sale of its Hydro
would be more profitable.
44. As set forth more fully below, the Hydro tokens that Hydrogen and Kane
distributed, offered, and sold through bounty programs, as employee compensation, and on
crypto asset trading platforms, including through Ostern, were offered and sold as investment
contracts and thus securities.  Each of these three phases of Hydrogen’s and Kane’s plan to
distribute, offer, and sell Hydro is addressed in turn.
A. Hydrogen’s Distribution, Offer, And Sale Of Hydro Tokens To Bounty
Program Participants
45. Concurrent with the Hydro airdrop, beginning on or around January 25, 2018,
Hydrogen and Kane implemented a bounty program, whereby airdrop recipients could receive
payments of additional Hydro in exchange for completing certain promotional tasks, such as
translating the Whitepaper and other documents from English into other languages.
46. At Kane’s direction, Hydrogen advertised the bounty program on its website and
other online forums.
47. In promoting the bounty programs and, more broadly, the Hydro token and
Hydrogen platform, Hydrogen and Kane emphasized the professional expertise and success of
the Hydro team by including their biographies, which featured previous work experiences at top
investment banks and consulting firms, awards received in the fintech space, their expertise in
“crypto-assets,” speeches Kane was giving on the “power of the public blockchain to thousands

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of European tech entrepreneurs,” and the expected impact that the Hydrogen platform would
have in the financial services ecosystem.  Hydrogen touted this information on the company
website and in other Hydrogen protocol marketing materials.
48. At Kane’s direction, Hydrogen “hosted” its bounty campaign, called “Project
Hydro,” on Bounty0x, a popular crypto asset bounty-hunting platform.  The Project Hydro
bounty campaign on Bounty0x consisted of eight different bounties, each with its own assigned
bounty task and allotted Hydro token “reward.”  For example, one bounty available as of January
29, 2018, was the “Reddit Bounty” pursuant to which bounty program participants would receive
Hydro in exchange for “upvoting” (or signaling approval or, in Facebook parlance, “liking”) “all
posts” made by or from Hydrogen’s Project Hydro account “for a week.”
49. To participate in the bounty program, participants were required to sign up on
Bounty0x and provide their prior airdrop user credentials.  On completion of the bounty tasks,
participants were required to submit proof of completion, and, upon Hydrogen’s approval, the
company distributed Hydro to the bounty participants’ digital wallets.
50. In February 2018, Hydrogen distributed at least 238,666 Hydro to 177 bounty
program participants in exchange for the services they provided to Hydrogen.
51. Beginning in May 2018, Hydrogen, at Kane’s direction, implemented a second
bounty program.  Pursuant to this second bounty program, developers called “Decentralization
Ambassadors” (“DAs”) could and were expected to market and promote Hydro and the
Hydrogen platform across various online social media platforms and channels, monitor those
platforms and channels, and identify potential Hydro use-applications (or “dApps”) for social
media discussion.

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52. In exchange for completing these tasks (or as Hydrogen called them “duties”),
DAs would, and did, receive Hydro.  For example, in a July 9, 2018 post on its Medium blog,
Hydrogen told potential DAs that they would receive 222,222 Hydro per month over 24 months.
53. One of the bounty tasks DAs could complete was “[b]ringing and onboarding new
developers into the [Hydrogen] ecosystem,” to whom Hydrogen would distribute Hydro.
54. Between at least August and November 2018, Hydrogen distributed 35,434,611
Hydro to 19 DAs as part of this program.
55. As with the airdropped Hydro, neither Hydrogen nor Kane placed any restriction
on the resale of Hydro distributed to the participants in either of the two bounty programs.
B. Hydrogen’s Distribution, Offer, and Sale Of Hydro Tokens To Its Employees
As Compensation
56. In February 2018, as part of its plan to raise capital via distribution of Hydro,
Hydrogen and Kane set aside about 3.4 billion Hydro to be issued to company employees.
57. Beginning in mid-February 2018, Hydrogen distributed approximately 2.9 billion
Hydro to its employees as part of their compensation for 2018.
58. The initial distribution occurred on February 16, 2018, and included the
distribution of approximately 1.38 billion Hydro to each of Kane and his brother, Hydrogen’s co-
founder and Head of Product (and current CEO), and approximately 278 million Hydro to each
of Hydrogen’s Blockchain Engineer and Head of Financial Engineering.
59. Later, beginning in May 2018, Hydrogen distributed approximately 150 million
Hydro to approximately 25 of its employees, company-wide.  This distribution was not limited to
Hydrogen’s internal development team, contrary to what Hydrogen and Kane had said publicly
about reserving a percentage of the minted tokens only for that team.

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60. As with the Hydro distributed via Hydrogen’s airdrop and bounty programs,
neither Hydrogen nor Kane placed any formal resale restrictions on the Hydro tokens distributed
to company employees.
61. At the time of the May 2018 company-wide distribution, Hydrogen’s external
auditors, with assistance from Kane and others at Hydrogen, valued the Hydro token at
approximately 0.4621 cents per token.  By contrast, at the time of the February 16, 2018 grant to
Kane, his brother, and two others, Hydro was valued by the company’s external auditors at
approximately 0.000529 cents per token.  This difference in valuation was due primarily to the
Hydro token’s resale value on secondary trading markets as a result of Hydrogen’s and Kane’s
efforts to have Hydro listed on several crypto asset trading platforms, described further below.
Indeed, by the time of the May 2018 company-wide distribution, Hydro had already been listed
on several crypto asset trading platforms.
C. Hydrogen And Kane Created A Trading Market For And Promoted The
Profit Potential Of Hydro Tokens
62. Almost immediately after the airdrop concluded in February 2018, Hydrogen and
Kane began their efforts to have Hydro listed on several crypto asset trading platforms.
63. Upon receipt of the airdropped Hydro on February 19-20, 2018, Hydro token
holders were asking, on Hydrogen’s Telegram channel and other social media pages, if and when
the Hydro token was going to be listed on crypto asset trading platforms.
64. As part of the company’s listing efforts, Hydrogen and Kane encouraged
members on the Hydrogen Telegram channel to vote or petition for Hydro to be listed on crypto
asset trading platforms.
65. Kane spearheaded Hydrogen’s efforts to list Hydro by identifying, filling out, and
submitting listing applications to various crypto asset trading platforms, and liaising with their

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representatives.  Hydrogen and Kane used a strategy of listing Hydro on as many low-trading-
volume platforms as possible in order to able to eventually have Hydro listed on larger-volume
and more-established trading platforms.
66. Hydrogen’s listing efforts resulted in Hydro being listed on at least 17 crypto
asset trading platforms, including on March 22, March 30, April 24, and August 28, 2018.
67. Hydrogen’s official Twitter account publicly announced each new listing and
repeatedly advertised that the Hydro token was available for trading on multiple crypto asset
trading platforms, including two popular, high-volume platforms, one of which is based in the
United States.
68. Hydrogen also announced each new listing in its public Telegram channel, on
Reddit, and through weekly update emails to its growing community of token holders, including
those who had received Hydro via airdrop.  Kane drafted each of these new listing
announcements.
69. For example, in the April 2, 2018 weekly update email to Hydro token holders
that Kane drafted, Hydrogen and Kane told Hydro token holders that certain crypto asset trading
platforms had “added” Hydro on their platforms.
70. Kane deliberately chose to use the word “added” rather than “listed,” because he
understood that “listing” a crypto asset on a trading platform, like listing equity stocks on an
exchange, would make that crypto asset more likely to be viewed by investors as an
investment—and thus a security.  In fact, in a March 21, 2018 internal conversation held via
Slack, an online messaging application, Hydrogen’s Head of Financial Engineering wrote Kane:
“@Mike, we have a couple options.  (1) we can sort of contradict what we’ve stated before and
now announce we’re listing on exchanges for X reason . . . or (2) we can have a random person

19
who is not us make a post saying ‘looks like Hydro is now trading on X exchange[.]”  In
response, Kane wrote: “well I think we just say ‘x platform’ has added Hydro rather than ‘we
listed it’ and keep saying that everytime, non-chalantly . . . I don’t think we have to give any
reason[.]”
71. While Hydrogen and Kane worked to have Hydro listed on crypto asset trading
platforms, the company fielded numerous questions on its social media pages and channels from
Hydro recipients and purchasers about the token’s value and whether and when Hydrogen
expected the token’s price to increase.
72. At Kane’s direction, Hydrogen created a set of scripted responses to these
questions, being careful not to expressly state that the Hydro token would increase in value.
Nevertheless, in conversations as early as April 24, 2018, Kane led at least one Hydro investor
(and a member of Hydrogen’s Board) to believe that Hydro “WILL have value.”
73. Indeed, in a February 17, 2018 email, the same investor and Board member wrote
to Kane: “[a]s everyone has acknowledged that these digital assets [Hydro] may accrete in value
over time, your contention that this [the airdrop] was merely a software delivery is tenuous.”
74. A few days later, at a Hydrogen Board meeting, the same investor and Board
member insisted several times that it was “ridiculous” for Hydrogen to continue to claim Hydro
tokens had no value.
75. When asked about the value of Hydro on a Reddit Ask-Me-Anything (“AMA”)
thread on May 12, 2018, Hydrogen responded, “Our team has been working very hard to
increase awareness [of the token and the platform] through reddit, medium, twitter and telegram.
We have seen amazing success so far . . . .”

20
76. Also, in May 2018, Kane appeared on a podcast and claimed that Hydrogen was
very profitable and was “growing very very very fast,” signaling that its efforts to develop the
Hydrogen platform were on track.
77. In addition, in an October 2018 post on its Medium blog, Hydrogen touted the
variety of applications that purportedly could be developed using Hydro on the platform and
emphasized that “the digital advertising market now produces over $88 billion in revenue.”
78. Further, Hydrogen sought to create the appearance of demand for, and thus an
increase in value of, Hydro by claiming that its financial institution clients—who utilized only
the company’s non-blockchain API, for which Hydro had no functionality—could use Hydro to
access and use certain Hydrogen platform functions.
79. For example, in the May 1, 2018 weekly email update to Hydro token holders,
Hydrogen and Kane told investors they would soon announce “dozens of companies integrating
Hydro API and using our Hydro app”, as well as additional partnerships and “new exchange
platforms.”
80. Likewise, when asked in the May 12, 2018 Reddit AMA thread if the company
was “in talks with any financial institutions that are interested in utili[z]ing a Hydro blockchain
token based solution”, Hydrogen responded that many of its clients were interested and added,
“[w]e are confident that our product is attractive enough to be used by them and we have a major
advantage with them already paying for our other products.”  In the same AMA thread, when
asked if any existing API clients had inquired about Hydro, Hydrogen replied, that “all” of its
clients were “interested” in and “talking to [the company] about Hydro.”
81. However, as Kane acknowledged in a private communication with Ostern in late-
January 2019, Hydrogen’s “API clients” were not required to use Hydro in any part of the

21
Hydrogen platform.  Ostern replied, “Oh really?  So everything is Fiat [currency] and the token
has no real utility?”—to which Kane responded, “not right now . . . .”
82. Nevertheless, Hydrogen repeatedly touted its growing number of non-blockchain
API partnerships with major financial institutions to signal the growth of the Hydrogen platform
and increased demand for the Hydro token.
83. For example, on March 2, 2018, Hydrogen’s Blockchain Engineer stated on the
company’s Telegram channel that “adoption of this [Hydro] token will be valuable to us as we
convince companies to use it [on the platform] alongside our other products,” thereby reinforcing
that the value of the token was linked to and in fact depended on the company’s efforts to grow
the Hydrogen platform.
84. Further, once Hydro became listed and available for trading, Hydrogen and Kane
routinely informed their community of token holders when Hydro’s trading volume was highly
ranked on specific crypto asset trading platforms.
85. Hydrogen and Kane also publicly stated that Hydrogen did not sell Hydro to its
API clients because “they are purchasing [Hydro] on their own” on the secondary market.
86. While Hydrogen and Kane were seeking to have Hydro listed on crypto asset
trading platforms and after the token was available for trading, Hydrogen continued to highlight
its management and development teams, in particular their prior experience at hedge funds and
large financial institutions and with launching another fintech company.
87. As part of their strategy to increase the demand for and value of Hydro, Hydrogen
and Kane disseminated news and updates about the company, its platform development, the
public distribution of the Hydro token, and the trading market for Hydro.  Kane then intended to

22
capitalize on Hydro’s increased value by selling the company’s Hydro at inflated prices to raise
funds for the company.
V. Kane And Hydrogen Hired Moonwalkers To Manipulate The Price And Volume Of
Hydro And Reap Greater Profits From The Offers And Sales Of The Company’s
Hydro
88. In May 2018, Kane told Hydrogen’s Board that the company was going to run out
of cash by October of that year.  This was consistent with what Kane had told the Board earlier,
in February 2018—that the company had cash on hand to sustain operations for approximately 8
to 10 months from then.
89. To raise capital, Kane told the Board at the May 2018 meeting that the company
would have to sell about $1 million worth of Hydro, either in a private sale to a venture capital
firm, hedge fund, or asset manager, or publicly into the secondary trading market Hydrogen and
Kane had created and were continuing to create.
90. Later, on or around July 12, 2018, Kane proposed a fundraising plan to
Hydrogen’s Board to sell $1-5 million in Hydro from the company’s repository and into the
secondary market to raise revenue.
91. However, Kane had already begun selling Hydro from the company’s repository,
using his own personal trading accounts with crypto asset trading platforms, two months earlier,
in May 2018.  Between May 9 and October 7, 2018, Kane sold 472,141,735 Hydro
(approximately 4.25% of the total minted supply) from Hydrogen’s repository using his personal
trading accounts.
92. Kane did so despite the fact that he and Hydrogen publicly stated, in a May 18,
2018 Medium blog post, that Hydrogen had no plans to distribute any of its Hydro and that, in
the event of a planned distribution from the repository, the company would “alert the Hydro
community with 30 days[’] notice.”

23
93. However, at no point did Hydrogen or Kane disclose Kane’s selling of Hydro
from the company’s repository, or Ostern’s subsequent sales of the company’s Hydro.  In fact, in
April 2018, Kane told one U.S.-based crypto asset trading platform on which Hydro was later
listed that the company would only sell its tokens as needed to pay for Ethereum costs tied to the
Hydrogen platform.
94. After Kane began selling the company’s Hydro through his personal trading
accounts with crypto asset trading platforms, he quickly learned that the considerable volume of
Hydro that Hydrogen needed to sell to raise sufficient cash would significantly depress, and did
significantly depress, Hydro’s price on the secondary market thus making it difficult to raise
such funds.
95. As a result, in July 2018, Kane began searching for a crypto asset “market
making” firm to use the company’s Hydro to create the appearance of increased Hydro trading
volume on the secondary market, and prop up Hydro’s price so that the company could sell its
Hydro into that market without significantly depressing the token’s price, and enabling Kane and
Hydrogen to raise their desired capital.
96. In late July and again in August 2018, Kane informed Hydrogen’s Board that the
company would begin searching for “above board market makers” to help put forward a realistic
token sale strategy.
97. During that same timeframe, Kane directed two members of Hydro’s core team to
preview the services provided by a list of “market makers” he compiled after conducting his own
preliminary research and reviewing the websites and marketing materials of the firms he had
identified—including Moonwalkers.

24
98. The name “Moonwalkers,” which Ostern selected, derives from the expression
“going to the moon,” which is used by crypto enthusiasts and issuers to describe the potential
significant appreciation in price or value of crypto assets.
99. On its website at the time, Moonwalkers described its services as follows:
We  work  closely  with  your  teams  to  ensure  our  market  making
efforts are even more effective....We then create stability while we
subtly direct the Coin or Tokens[’] price and volume upward; using
our in-house software solutions.
Using  our  in-house  software,  we  are  able  to  transact  thousands  of
trades a second.  This allows us to create volume in such a way that
has been unheard of in the space.  (Don’t worry, we’ve gone to great
lengths to ensure that our strategies in doing so, look as organic
as possible.  They are ind[is]cern[i]ble from organic trades.)
We’ve  developed  strategies  to  sell  your  tokens  in  such  a  way  that
does  not  harm  the  market  price  of  your  coin/token  while  making
market.    (In  fact,  we  sell  in  such  a  way  that  actually  facilitates
upward movement!).
100. On or around August 6, 2018, Ostern provided a demonstration of Moonwalkers’
“in-house software” to Hydrogen employees, after which one employee, Hydrogen’s Blockchain
Engineer, informed Kane over email, “[t]hey seem to have a pretty robust trading bot”—a
computer program used to automate trades.  In the same email, Hydrogen’s Blockchain Engineer
told Kane, “[t]hey would be providing the liquidity and market making to make sure our selling
doesn’t lower the price” of the Hydro token.
101. In an email on September 17, 2018, just weeks before Kane had projected
Hydrogen would run out of cash, Kane instructed Hydrogen’s Head of Financial Engineering to
“get the market making firm(s) set[]up for October 1.”
102. After comparing Moonwalkers’ proposed cost and the quality of its trading bot to
the other market making firms under consideration by Hydrogen, Kane signed off on retaining
Moonwalkers on or around October 1, 2018.

25
103. On October 4, 2018, Hydrogen and Moonwalkers executed a Market Making
Services Agreement, pursuant to which Moonwalkers would provide “market making” and other
services for a fixed fee of $9,000 per month beginning October 9, 2018.  Ostern signed the
agreement on behalf of Moonwalkers.  Ostern was ultimately compensated by Hydrogen in
exchange for his “market making” services.
104. Pursuant to that agreement, Moonwalkers agreed, among other things, to “provide
market making services” to Hydrogen and sell the company’s Hydro tokens—while “devaluing
the price of [Hydro] as little as possible”—on two specified crypto asset trading platforms,
including one based in the U.S.  As part of the agreement, Hydrogen also provided 5 Bitcoin to
Moonwalkers to carry out these services.  The agreement also authorized Moonwalkers to use
Hydro-trading proceeds to carry out its “market making” services.  At the conclusion of the
contract, Moonwalkers was required to return the 5 Bitcoin and all trading proceeds, less any
trading fees incurred.
105. As a result, between October 2018 and April 2019, Ostern and Moonwalkers—at
Kane’s direction and with Hydrogen’s knowledge—used the company’s Hydro to manipulate the
price and trade volume of Hydro, in order to induce crypto asset traders to purchase Hydro and
enable Ostern to sell the company’s Hydro at a greater profit.
106. To initiate Ostern’s and Moonwalkers’ “market making” on behalf of Hydrogen,
Kane provided Ostern with the login credentials to access his personal trading accounts on the
two specified crypto asset trading platforms, one of which Kane had recently upgraded to a
“corporate” account that could facilitate higher trading volume and faster token sales.  In
addition, Kane transferred, and directed others at Hydrogen to transfer, Hydro from the
company’s repository, as well as Bitcoin and ETH, to the two trading accounts used by Ostern.

26
107. Ostern and Moonwalkers created a customized trading bot for Kane and
Hydrogen to create the appearance of active trading in Hydro and to allow Ostern to sell the
company’s Hydro on trading platforms without depressing the token’s price.
108. Moonwalkers’ trading bot deployed a mix of automatic and semi-automatic
functions to place-and-cancel buy and sell orders at random increments to create the false
appearance of robust market activity, which was intended by Kane, Hydrogen, and Ostern to
induce other market participants to trade Hydro.
109. The artificially-inflated trading volume created by Ostern, at Kane’s direction,
enabled Ostern to sell Hydro from Hydrogen’s company repository into the secondary crypto
market with minimal impact on Hydro’s price.
110. Further, Ostern manually executed the Moonwalkers bot’s semi-automatic
options, including by setting trade limits to carry out limit orders, which are orders to purchase or
sell a security at a pre-specified price or better.
111. In addition, Ostern manipulated the Hydro market by placing multiple orders to
buy or sell Hydro that Ostern never intended to execute, i.e., non-bona fide or what Ostern
termed “zombie” orders.”  These non-bona fide or “zombie” orders were intended to create the
false appearance of market interest and increase Hydro’s price so that Ostern could then execute
bona fide orders—selling the company’s Hydro—at more favorable prices.  After executing his
bona fide orders at the manipulated prices, Ostern would cancel and clear his prior “zombie”
orders from the U.S. trading platform’s limit-order pools.  In fact, in an October 9, 2018 email,
Moonwalkers asked for Kane’s assistance in “manually clearing zombie orders”, to which Kane
replied, “[w]e’re online all day and night, so it’s not an issue.”

27
112. Ostern described this manipulative trading strategy as “spoofing.”  Spoofing or
“layering” refers to the use of fake or non-bona fide orders in a particular security to push the
market for that security in a particular direction and obtain a more favorable execution of bona
fide orders on the opposite side of the market—at which point the non-bona fide orders are then
cancelled.
113. From the outset, in October 2018, Kane and Hydrogen provided input on the
trading bot’s objectives, instructing Moonwalkers to sell 200-400 million Hydro (approximately
1.8-3.6% of the total minted supply) per month, or an average of about 10 million per day, and to
sell as much as Hydro as it could while keeping the price of the token afloat, thereby enabling
Hydrogen and Kane to profit from sales of the company’s Hydro.
114. Specifically, Kane provided the monthly Hydro sales target to Ostern in an
October 13, 2018 email.  In the same email, Kane told Ostern that, with his trading of the
company’s Hydro, he would convert Hydro sales proceeds from Bitcoin to U.S. dollars and
transfer that money to Hydrogen’s bank account, but offered to leave “extra” Bitcoin in his
trading platform account to be used by Ostern to “make” and manipulate a market in Hydro.
Kane concluded his email by reiterating his and Hydrogen’s objective: “to raise cash through
these sales.”
115. In his reply email the same day, Ostern told Kane he “[u]nderstood” the monthly
sales target and added: “We’re constantly playing both sides to get the price to move upward.
[Hydro] get sold into a bit but cancel after a certain percentage is filled to ensure that we’re not
buying back all the tokens we just sold.”  And, with respect to Kane’s offer to leave “extra”
Bitcoin in his trading platform account, Ostern replied: “yeah definitely try to keep a little in
there for manipulation if you can per month.”  In that reply email, Ostern also told Kane that he

28
would “slowly ramp things up over time” so that they could “have a larger amount of liquid
capital rotating through for profit, as well as subtly moving the price [of Hydro] upward.”
116. In addition to directing Ostern regarding the target volume of Hydro to be sold
and conveying to him their trading objectives, Kane and Hydrogen also directed and participated
in the scheme by continuously allocating Hydro (and Bitcoin and ETH) for Ostern to use and
holding regular calls with Ostern to ensure their objectives were being met.
117. Further, as part of the market manipulation scheme, Hydrogen and Moonwalkers
maintained a private Slack channel through which Ostern provided Kane and Hydrogen with
updates about his efforts to artificially inflate Hydro’s trading volume and prop up the price of
the token on the two trading platforms.
118. For example, on October 11, 2018, Ostern wrote the following to Kane in the
private Hydrogen-Moonwalkers Slack channel:
We’re  starting  off  slow,  trying  to  keep  the  sell  pressure  minimal
until we can build enough capital to really get the market moving
upward.  Down the road a little ways we’ll try and keep you guys at
the  top  of  CMC
5
  /  Exchange  Lists.    Try  not  to  push  too  hard  on
selling  now,  we’ll  have  plenty  of  excuses  to  pump  price  and  sell
into the FOMO
6
 guys down the road.  Not to mention high volume
days.
119. A week later, on October 18, 2018, Ostern wrote to Kane: “We get into the
[online] trade chats and kind of try and fomo people in.  (And talk you up in chat).”

5
  CMC, or CoinMarketCap, is an online platform that ranks crypto assets by trading
volume.
6
  In the crypto asset space, “FOMO” or “fear of missing out” typically refers to a sharp
increase in the price of a crypto asset occurring where investors “fear” that they may lose out on
profiting from the remainder of a “bullish breakout,” when a crypto asset’s price moves above its
previously established resistance level (a price point at which an asset encounters considerable
selling pressure), signaling a trend upward.

29
120. On October 21, 2018, Ostern updated Kane again:
Set  the  bot  pretty  aggressively  now  that  we’ve  got  a  little  more
capital to play with.  Now using the [C]huck [Norris] account [on
Hydrogen’s Telegram channel] to spread the news a bit . . . Hop on
a call quick Mike?  Have a tactic we’ve used a few times that works,
I’d  like  to  explain  a  bit.    Basically  we’re  going  to  insight  [sic]  a
firesale  to  shake  the  weak  hands,  and  get  the  sell  walls  to  move
down a bit so we gain position then push price hard.
121. The same day, upon Ostern setting the bot aggressively and touting Hydro on
Telegram, Hydro’s market volume increased from less than 5 million Hydro to a peak of over 15
million as a result of the buy order pressure exerted by the Moonwalkers’ bot between 12:00
p.m. and 3:00 p.m. ET.
122. On October 26, 2018, Ostern and Kane communicated on the private Hydrogen-
Moonwalkers Slack channel about Ostern’s efforts to increase Hydro’s trading volume, at
Kane’s direction.  Specifically, Ostern wrote to Kane: “Did a little volume shenanigans . . . #1
volume on [the U.S.-based trading platform] . . . Around half is fake, took about 3 seconds for
bot to generated [sic] about a million.”  Kane responded, “Yes saw that, lots of volume.  It helps
to attract other exchanges, we get 1-2 a week now to reach out.”
123. Between October 8, 2018, and January 31, 2019, Kane’s account at the U.S.-
based trading platform was consistently in the top 3 of daily Hydro traders, often accounting for
more than 50% of all daily buy and sell order and cancellation volume, up from the average of
less than 5% prior to when Moonwalkers’ began trading.
124. During the same period, Kane’s account with the same U.S. trading platform
typically had a fill rate
7
 of 3% to 15%, which was low, due at least in part to the large number of
non-bona fide or “zombie” orders Ostern placed and cancelled.

7
  A “fill rate” measures the number of units executed as a fraction of the units ordered.

30
125. While Ostern was manipulating the market in Hydro and selling Hydrogen’s
Hydro tokens through Kane’s crypto asset trading platform accounts, Kane continued to sell
Hydro through new, separate trading accounts he created.
126. Neither Kane nor Hydrogen ever publicly disclosed Kane’s or Ostern’s sales of
Hydro from the company’s repository.
127. In January 2019, in Hydrogen’s internal “Kickoff Video,” Hydrogen told its
employees that the company had achieved revenue of over $2 million from “property sales” in
2018.  In fact, this amount represented Hydrogen’s sales of Hydro in the secondary market
through Moonwalkers and Kane.
128. Hydrogen’s financial statements for 2018 and 2019, which were not filed with the
SEC or otherwise publicly disclosed, reflected a total of approximately $2.22 million in
“cryptocurrency revenue.”
129. The cash raised through Ostern’s sales of Hydro, at Kane’s direction and on
Hydrogen’s behalf, permitted the company to continue operations and forgo the need to raise
capital from other sources.
130. By engaging in the market manipulation described above, Ostern, Kane, and
Hydrogen knew, or were reckless in not knowing, they were engaged in manipulative, deceptive,
and fraudulent conduct, because Ostern’s sales of Hydro and market manipulation—carried out
at Kane’s and Hydrogen’s direction and with their knowledge and active participation—were
intended to create the false appearance of robust Hydro trade volume and artificially prop up the
token’s price, in order to induce market participants to trade in Hydro and ensure that Hydrogen
reaped greater profits from the sales of its Hydro tokens.

31
VI. Defendants Offered And Sold Hydro Tokens As Investment Contracts, And These
Offers And Sales Of Securities Were Not Registered With The SEC
131. Hydrogen and Kane offered and sold Hydro as investment contracts, or securities,
through Hydrogen’s bounty programs and employee compensation, and through Defendants’
offers and sales of Hydro in the crypto asset trading market.
132. Moonwalkers also offered and sold Hydro as an investment contracts through
crypto asset trading platforms.  By selling Hydro tokens on behalf of Hydrogen and Kane, Ostern
played a substantial role in, and indeed was an essential part of, Hydrogen’s scheme to offer and
sell Hydro, and at a minimum Ostern engaged in steps necessary to the distribution of Hydro.
133. Notwithstanding their attempts to circumvent the federal securities laws’
registration requirements, Hydrogen and Kane marketed Hydro as an investment in Hydrogen’s
enterprise.  The economic reality and substance of what Hydrogen and Kane were offering and
selling—investments in Hydro—was clear.  Hydro purchasers would have reasonably expected,
and were led by Hydrogen and Kane to expect, to profit from Hydrogen’s stated efforts to
develop the Hydrogen platform and list Hydro on trading platforms.
134. First, the offers and sales of Hydro tokens by Hydrogen and Kane, including
through Ostern, involved an investment of money.  Those who purchased Hydro on trading
platforms, including U.S. investors, paid with U.S. dollars or with Bitcoin and ETH.  Further,
Hydrogen employees and bounty program participants obtained Hydro in exchange for the value
of their labor, services, and efforts to market, promote, and develop the Hydrogen platform.
135. Second, Hydro purchasers invested in a common enterprise because their fortunes
were tied to those of other Hydro investors, and to those of Hydrogen and Kane.
136. Hydro investors’ fortunes were tied to each other, because if Hydro increased in
value, all investors would share in that increased value on a pro rata basis.  Hydro investors also

32
had a shared interest in the growth of the Hydrogen platform and thus the demand for and value
of Hydro, which was inextricably linked to the development of the platform.  In addition, the
proceeds of Hydrogen’s and Ostern’s sales of Hydro on crypto asset trading platforms were
pooled in Hydrogen’s accounts.
137. Hydro investors’ fortunes were also tied to those of Hydrogen and Kane.  For
example, because Hydrogen, Kane, and other company employees held approximately 65% of
the total pool of Hydro in circulation, including 35% in the company’s repository, their interest
in Hydro appreciating in value was aligned with, and indeed the same as, that of Hydro investors.
138. Third, Hydro investors were led by Hydrogen and Kane to reasonably expect that
they would receive profits from their Hydro investments based on the managerial efforts of
others, including Hydrogen and Kane.  As Hydrogen and Kane made clear in Hydrogen’s public
promotional and marketing materials and on its website and social media pages and channels, the
value of Hydro depended entirely on Hydrogen’s and Kane’s efforts, including to develop and
manage the Hydrogen platform.  In marketing Hydro, Hydrogen and Kane repeatedly touted
Hydrogen’s profitability, accelerated growth, and the Hydrogen team’s blockchain and fintech
expertise and experience.  They also touted its “long-standing relationships” and partnerships
with major financial firms as part of the company’s non-blockchain API business.
139. Hydrogen and Kane also led Hydro investors to reasonably expect to profit from
their Hydro investments by publicly touting the results of their efforts to have Hydro listed on
trading platforms, where investors would be able to sell their Hydro at a profit.  For example, as
discussed above, Hydrogen publicly announced each new platform listing of Hydro on its social
media pages and channels, signaling to investors the opportunity to profit from sales on those
platforms.

33
140. Sections 5(a) and 5(c) of the Securities Act require an offeror of securities to
register its offers and sales of securities with the SEC.  Hydrogen’s and Kane’s offers and sales
of the company’s Hydro tokens, as well as Ostern’s sales for the company, were not registered
with the SEC, and no registration exemption was available.
FIRST CLAIM FOR RELIEF
Violations of Section 5(a) and 5(c) of the Securities Act
(All Defendants)

141. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.
142. By reason of the conduct described above, without a registration statement in
effect as to that security, Defendants, directly and indirectly, (a) made use of the means and
instruments of transportation or communications in interstate commerce or of the mails to sell
securities through the use or medium of any prospectus or otherwise, and (b) made use of the
means and instruments of transportation or communication in interstate commerce or of the
mails to offer to sell through the use or medium of a prospectus or otherwise, securities as to
which no registration statement had been filed.
143. Hydrogen violated Sections 5(a) and 5(c) of the Securities Act by, from as early
as January 2018 through at least April 2019, directly and indirectly making use of the means and
instruments of transportation or communications in interstate commerce or of the mails to offer
and sell Hydro tokens, via bounty programs, employment compensation, and sales in the
secondary trading market, without a registration statement in effect as to any offers or sales of
Hydro, and by making use of the means and instruments of transportation or communication in
interstate commerce or of the mails to offer to sell Hydro tokens, which were offered and sold as
securities, as to which no registration statement had been filed.

34
144. Kane violated Sections 5(a) and 5(c) of the Securities Act by, from as early as
January 2018 through at least April 2019, directly and indirectly making use of the means and
instruments of transportation or communications in interstate commerce or of the mails to offer
and sell Hydro tokens, via bounty programs, employment compensation, and sales in the
secondary trading market, without a registration statement in effect as to any offers or sales of
Hydro, and by making use of the means and instruments of transportation or communication in
interstate commerce or of the mails to offer to sell Hydro tokens, which were offered and sold as
securities, as to which no registration statement had been filed.
145. Ostern violated Sections 5(a) and 5(c) of the Securities Act by, from as early as
October 2018 through at least April 2019, directly and indirectly making use of the means and
instruments of transportation or communications in interstate commerce or of the mails to offer
and sell Hydro tokens, via sales of Hydrogen’s Hydro tokens in the secondary trading market
using Kane’s personal trading accounts with crypto asset trading platforms, without a registration
statement in effect as to any offers or sales of Hydro, and by making use of the means and
instruments of transportation or communication in interstate commerce or of the mails to offer to
sell Hydro tokens, which were offered and sold as securities, as to which no registration
statement had been filed.
146. By virtue of the foregoing, Defendants violated, and unless enjoined will continue
to violate, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a), (c)].
SECOND CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and 10b-5(c)
(All Defendants)

147. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.

35
148. By reason of the conduct described above, Defendants, directly or indirectly,
acting intentionally, knowingly or recklessly, in connection with the purchase or sale of
securities, by the use of the means and instruments of interstate commerce or of the mails,
employed devices, schemes, or artifices to defraud, and engaged in acts, practices, or courses of
business which operated or would operate as a fraud or deceit upon other persons.
149. Ostern, Kane, and Hydrogen knew, or were reckless in not knowing, they were
engaged in manipulative, deceptive, and fraudulent conduct, because, among other things,
Ostern’s sales of Hydro and market manipulation—carried out at Kane’s and Hydrogen’s
direction and with their knowledge and active participation—were intended to create the false
appearance of robust Hydro trade volume and artificially prop up the token’s price, in order to
induce market participants to trade in Hydro and ensure that Hydrogen reaped greater profits
from the sales of its Hydro tokens.
150. By virtue of the foregoing, Defendants violated, and unless enjoined will continue
to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a) and 10b-
5(c) [17 C.F.R. §§ 240.10b-5(a), (c)] promulgated thereunder.
THIRD CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(1) and (3)
(All Defendants)

151. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.
152. By reason of the conduct described above, Defendants, in the offer or sale of
securities, acting with the requisite degree of scienter, by the use of the means and instruments of
transportation and communication in interstate commerce or by use of the mails, directly or
indirectly, Defendants, knowingly or recklessly, employed devices, schemes or artifices to

36
defraud, and knowingly, recklessly, or negligently engaged in a transaction, practice or course of
business which operated or would operate as a fraud or deceit upon the purchaser of such
securities.
153. Ostern, Kane, and Hydrogen knew, were reckless in not knowing, and should
have known they were engaged in manipulative, deceptive, and fraudulent conduct, because,
among other things, Ostern’s sales of Hydro and market manipulation—carried out at Kane’s and
Hydrogen’s direction and with their knowledge and active participation—were intended to create
the false appearance of robust Hydro trade volume and artificially prop up the token’s price, in
order to induce market participants to trade in Hydro and ensure that Hydrogen reaped greater
profits from the sales of its Hydro tokens.
154. By virtue of the foregoing, Defendants violated, and unless enjoined will again
violate, Sections 17(a)(1) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(1), (3)].
FOURTH CLAIM FOR RELIEF
Violations of Section 9(a)(2) of the Exchange Act
(All Defendants)

155. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.
156. By reason of the conduct described above, Defendants directly or indirectly, by
use of the mails or any means or instrumentality of interstate commerce, or of any facility of any
national securities exchange or any member of a national securities exchange, effected, alone or
with one or more other persons, a series of transactions in securities, creating actual or apparent
active trading in such securities and/or raising or depressing the price of such securities, for the
purpose of inducing the purchase or sale of such securities by others, including but not limited to
Ostern’s actions, directed by Kane and Hydrogen and with their knowledge and active

37
participation, to engage in market manipulation that affected the volume and prices of such
securities for the purpose of inducing the purchase or sale of such securities by others.
157. Hydrogen, Kane, and Ostern acted with the intent to induce trading by others.
158. By virtue of the foregoing, Defendants violated, and unless enjoined will continue
to violate, Section 9(a)(2) of the Exchange Act [15 U.S.C. § 78i(a)(2)].
FIFTH CLAIM FOR RELIEF
Violations of Section 20(b) of the Exchange Act
(Kane and Hydrogen)

159. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.
160. By reason of the conduct described above, Kane and Hydrogen, directly or
indirectly, committed violations of Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C.
§ 77q(a)(1), (3)] and Sections 9(a)(2) and 10(b) [15 U.S.C. §§ 78i(a)(2) and 78j(b)] and Rules
10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a), (c)] through or by means of Ostern,
including through Ostern’s fraudulent manipulation of the Hydro securities market which he
carried out at Kane’s and Hydrogen’s direction and with their knowledge and active
participation.
161. By virtue of the foregoing, Kane and Hydrogen violated, and unless enjoined will
continue to violate, Section 20(b) of the Exchange Act [15 U.S.C. § 78t(b)].
SIXTH CLAIM FOR RELIEF
Violations of Section 15(a) of the Exchange Act
(Ostern)

162. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through
140, as though fully set forth therein.

38
163. By reason of the conduct described above, Ostern was and acted as an
unregistered broker or dealer, by making use of the mails or any means or instrumentality of
interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or
sale of Hydro.  Specifically, Ostern, who has never been registered with the SEC in any capacity,
effected trading in crypto asset securities, on Hydrogen’s behalf, through controlled sales of the
company’s Hydro tokens, to generate profits for Hydrogen, and he received compensation from
Hydrogen for these services.
164. By virtue of the foregoing, Ostern violated, and unless enjoined will continue to
violate, Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)].
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court enter Final Judgments:
I.
Finding  that  Defendants  violated  the  statutes  and  rules  set  forth  in  this  Complaint  as  to
each;
II.
Permanently  restraining  and  enjoining  Defendants,  and  all  person  in  active  concert  or
participation with them, from violating, directly or indirectly, the statutes and rules set forth in this
Complaint as to each;
III.
Ordering Defendants to disgorge all ill-gotten gains derived from their illegal conduct as
set forth in this Complaint, including prejudgment interest thereon pursuant to Sections 21(d)(5)
and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(5) and (d)(7)];

39
IV.
Permanently barring Defendant Kane from serving as an officer or director of any issuer
that  has  a  class  of  securities  registered  pursuant  to  Section  12  of  the  Exchange  Act  [15  U.S.C.
§ 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C.
§ 78o(d)], pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2)
of the Exchange Act [15 U.S.C. § 78u(d)(2)].
V.
Prohibiting Defendants from participating, directly or indirectly, including, but not limited
to,  through  any  entity  controlled  by  them,  in  any  offering  of  securities,  including  crypto  asset
securities, provided, however, that such injunction shall not prevent either Kane or Ostern from
purchasing  or  selling  securities,  including  crypto  asset  securities,  for  his  own  personal  account,
pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)].
VI.
Ordering  Defendants  to  pay  civil  money  penalties  pursuant  to  Section  20(d)  of  the
Securities  Act  [15  U.S.C.  §  77t(d)]  and  Section  21(d)(3)  of  the  Exchange  Act  [15  U.S.C.
§ 78u(d)(3)];
VII.
Granting  such  other  and  further  relief  as  this  Court  determines  to  be  necessary  and
appropriate; and
VIII.
Retaining jurisdiction over this action to implement and carry out the terms of all orders
and decrees that may be entered.

40
JURY TRIAL DEMAND
Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff SEC demands that
this case be tried to a jury.

Dated:  September 28, 2022    Respectfully submitted,
                                                U.S.            SECURITIES            AND            EXCHANGE            COMMISSION
    By: /s/ Christopher J. Carney
Nicholas C. Margida (pro hac vice application to be filed)
Christopher J. Carney
U.S. Securities and Exchange Commission
Division of Enforcement
100 F Street, N.E.
Washington, DC 20549-5977
(202) 551-8504
[email protected]

Counsel for Plaintiff U.S. Securities and Exchange
Commission

Of Counsel:
Paul E. Kim
Sonia G. Torrico
Kathleen Hitchins

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
 
U.S. SECURITIES AND EXCHANGE 
COMMISSION, 
 
 Plaintiff, 
 
     -against- 
 
THE HYDROGEN TECHNOLOGY 
CORPORATION, MICHAEL ROSS KANE, 
AND TYLER OSTERN, 
 
 Defendants. 
 

 
 
 
 
 
 Case No. 22-cv-08284 
 
 Jury Trial Demanded 

 
COMPLAINT 

Plaintiff U.S. Securities and Exchange Commission (the “SEC”), for its Complaint, 

alleges as follows: 

SUMMARY 

1. This enforcement action arises from the unregistered offers and sales of crypto 

asset securities and market manipulation scheme by Defendants The Hydrogen Technology 

Corporation (“Hydrogen”), a financial technology (“fintech”) company based in Miami, Florida, 

its former President and CEO, Michael Ross Kane, and Tyler Ostern, President and CEO of 

Moonwalkers Trading Limited (“Moonwalkers”).   

2. From January 2018 through April 2019 (the “Relevant Period”), Hydrogen and 

Kane, offered and sold crypto asset securities called Hydro tokens (“Hydro”) and privately hired 

Ostern to fraudulently manipulate the price and volume of Hydro tokens traded on crypto asset 

trading platforms so that Hydrogen could sell its own Hydro tokens at a greater profit.  As a 

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2 

result of these unregistered offers and sales and fraudulent manipulation of the Hydro market, 

Hydrogen reaped profits of over $2.2 million.  

3. Hydrogen was formed in December 2017, when it was created out of, and 

obtained all of the technology, intellectual property, and employees of, Hedgeable, Inc., an SEC-

registered investment adviser, at which Kane was President and CEO.  Kane directed the creation 

of Hydrogen to raise much-needed capital, including through a token offering, sale, or 

distribution. 

4. In January 2018, Hydrogen created, or “minted,” 11,111,111,111 Hydro tokens 

and devised a plan to raise capital for Hydrogen by publicly distributing, offering, and selling 

Hydro to create and grow a market for Hydro so that Hydrogen and Kane could profit from the 

sale of the company’s own Hydro on crypto asset trading platforms.  In an effort to create a 

consumptive use for the Hydro token, Hydrogen and Kane planned to create a blockchain-based 

software ecosystem called the “Hydrogen platform” and to develop and release so-called “Hydro 

protocols” on that platform, which users would ostensibly use by paying with Hydro tokens.    

5. Hydrogen and Kane carried out their plan to distribute, offer, and sell Hydro in 

four overlapping phases:  (1) in January and February 2018, Hydrogen distributed Hydro through 

an “airdrop” or public “giveaway” of tokens; (2) in February 2018 and, again, beginning in May 

2018, Hydrogen held two bounty programs that provided Hydro to participants in exchange for 

completing tasks promoting the Hydro token and the Hydrogen platform; (3) between February 

and October 2018, Hydrogen distributed Hydro tokens to the company’s employees as 

compensation; and (4) from May 2018 through April 2019, Hydrogen and Kane, including 

through Ostern, executed controlled sales of the company’s Hydro on crypto asset trading 

platforms. 

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3 

6. Kane began selling the company’s Hydro through crypto asset trading platforms 

in May 2018, but soon after learned that selling a significant volume of Hydro would depress the 

token’s price and hinder his efforts to raise much-needed capital for Hydrogen.  As a result, in 

October 2018, Kane privately hired and directed Ostern and his company, Moonwalkers, a self-

described crypto asset “market maker,” to manipulate Hydro’s trading price and volume so that 

the company’s Hydro sales would be more profitable.  Moonwalkers did so by creating the false 

appearance of robust Hydro trading and artificially propping up the token’s price.   

7. Specifically, at Kane’s direction, Ostern used a customized trading bot (a 

computer program that automates trades) to sell the company’s Hydro through Kane’s personal 

trading accounts on crypto asset trading platforms.  Among other manipulation tactics, Ostern 

placed and canceled both buy and sell orders at random increments to artificially inflate the 

Hydro token’s trade volume and price, thereby enabling sales of the company’s Hydro to be 

more profitable. 

8. Ostern provided Kane and Hydrogen with regular updates on his market 

manipulation efforts.  For example, on October 11, 2018, just days after the Hydro market 

manipulation began, Ostern told Kane that he was “starting off slow, trying to keep the sell 

pressure minimal until [he could] build enough capital to really get the market moving upward” 

and indicated that they would “have plenty of excuses to pump price and sell into the FOMO 

[fear of missing out] guys down the road.”  Two weeks later, Ostern told Kane about his 

“volume shenanigans” on a popular, high-volume crypto asset trading platform, and bragged that 

it had taken his bot “about 3 seconds” to generate the illusion that “a million” Hydro tokens had 

been bought and sold—“[a]round half” of which Ostern admitted was “fake.” 

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4 

9. In addition, and as set forth more fully herein, the Hydro distributed by Hydrogen 

and Kane through the bounty programs, employee compensation, and sales in the crypto asset 

trading market, including through Ostern, were offered and sold as investment contracts, and 

therefore were securities whose offer or sale required registration with the SEC unless an 

exemption from registration was available.  Hydrogen and Kane did not file a registration 

statement with the SEC for their offers or sales of Hydro, and no exemption from registration 

was available. 

10. By engaging in the misconduct described herein, the Defendants violated 

numerous provisions of the federal securities laws, including certain registration, antifraud, and 

market manipulation provisions, as detailed below. 

NATURE OF PROCEEDING AND RELIEF SOUGHT 

11. The SEC brings this action pursuant to the authority conferred upon it by Section 

20(b) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77t(b)] and Section 21(d) of 

the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78u(d)]. 

12. The SEC seeks a final judgment against Hydrogen and Kane:  (a) permanently 

enjoining them from engaging in acts, practices, and courses of business alleged herein;           

(b) ordering them to disgorge, on a joint and several basis, their ill-gotten gains and pay 

prejudgment interest thereon pursuant to Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 

U.S.C. § 78u(d)(5) and (d)(7)]; (c) imposing civil money penalties on them pursuant to Section 

20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3)]; (d) permanently enjoining Hydrogen and Kane from participating in an 

offering of crypto asset securities or other securities and from violating the federal securities 

laws alleged in this Complaint, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C.       

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5 

§ 78u(d)(5)]; and (e) prohibiting Kane from acting as an officer or director of any public 

company, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 

21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)].   

13. The SEC also seeks a final judgment against Ostern:  (a) permanently enjoining 

him from engaging in acts, practices, courses of business, and violations alleged herein;            

(b) ordering him to disgorge his ill-gotten gains and pay prejudgment interest thereon pursuant to 

Sections 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(5) and (d)(7)]; 

(c) imposing civil money penalties on him, pursuant to Section 20(d) of the Securities Act [15 

U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and           

(d) permanently enjoining Ostern from participating in an offering of crypto asset securities or 

other securities, pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]. 

JURISDICTION AND VENUE 

14. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331, Sections 

20(b), 20(d) and 22 of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v], and Sections 

21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa].  Defendants, 

directly and indirectly, have made use of the means or instruments of transportation or 

communication in, and the means and instruments of, interstate commerce, or of the mails, in 

connection with the transactions, acts, practices, and course of business alleged herein. 

15. Venue in the Southern District of New York is proper pursuant to Section 27 of 

the Exchange Act [15 U.S.C. § 78aa].  Defendants conducted certain transactions, acts, practices, 

and courses of business constituting the violations alleged herein within this district, including 

offering and selling Hydro while in this district and to U.S. persons located in this district.  In 

addition, Defendants minted, distributed, marketed, listed on crypto asset trading platforms, 

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6 

and/or coordinated the offers and sales while in this district, and Hydrogen and Kane did so from 

Hydrogen’s office, which was located in this district during the Relevant Period. 

DEFENDANTS 

16. The Hydrogen Technology Corporation is a privately-held Delaware 

Corporation and currently is headquartered in Miami, Florida.  During the entire Relevant 

Period, Hydrogen was headquartered in New York, New York.  Hydrogen is a spin-off of 

Hedgeable, Inc. (“Hedgeable”), which was also a Delaware corporation headquartered in New 

York, New York.  Hedgeable was registered with the SEC as an internet investment adviser from 

2009 through December 2018, when its registration was terminated.  On December 21, 2018, 

Hedgeable settled with the SEC for violations of Sections 204, 206(2), and 206(4) of the 

Investment Advisers Act of 1940 and certain Rules thereunder, in connection with the 

dissemination of false and misleading marketing materials and performance data, and agreed to 

pay an $80,000 civil penalty.  Hydrogen’s primary business during the Relevant Period was 

centered on its application programming interface (“API”) solution, which Hydrogen’s clients, 

mainly banks and other financial institutions, pay Hydrogen to use in order to access the 

company’s data models for account and portfolio management. 

17. Michael Ross Kane, age 37, was Hydrogen’s CEO and Head of Business during 

the entire Relevant Period, and until December 2018 was President, CEO, and Head of Business 

of Hedgeable.  During the Relevant Period, Kane resided in New York City and, later, Miami 

Beach, Florida, where he currently resides.  During the SEC’s investigation that preceded this 

action, Kane invoked his Fifth Amendment privilege against self-incrimination, refusing to 

answer questions during sworn testimony. 

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7 

18. Tyler Ostern, age 28, resides in Coos Bay, Oregon and during the Relevant 

Period resided in Charlotte, North Carolina, then Myrtle Beach, South Carolina, and, after that, 

West Fargo, North Dakota.  At all times relevant to this Complaint, Ostern was the President, 

CEO, and head trader of Moonwalkers, a South African-incorporated company and self-

described “marketing firm” or “market maker” for crypto assets.  Ostern has never been 

registered with the SEC in any capacity.  

BACKGROUND ON CRYPTO ASSETS 

19. The term “crypto asset” (or, sometimes referred to as a “digital asset”) generally 

refers to an asset that is issued and transferred using distributed ledger or blockchain technology, 

including, but not limited to, so-called “cryptocurrencies,” “coins,” and “tokens.”1   

20. Entities have offered and sold crypto assets in fundraising events, often called 

initial coin offerings (“ICOs”), in exchange for consideration.  Generally, crypto assets may 

entitle holders to certain rights related to a venture underlying the fundraising event, such as 

rights to profits, shares of assets, rights to use certain services provided by the issuer, and/or 

voting rights.  Issuers of crypto assets typically release a “whitepaper” or marketing materials 

describing the project and the crypto asset. 

21. After an initial distribution or sale by the issuer, crypto assets are often tradeable 

upon delivery, including on secondary markets on crypto asset trading platforms.  Secondary 

market transactions allow investors to buy and resell securities originally sold by an issuer—for 

example, on exchanges or crypto asset trading platforms.  Secondary market trading in crypto 

                                                 
1   A blockchain or distributed ledger is a peer-to-peer database spread across a network, that 
records all transactions in theoretically unchangeable, digitally recorded data packages.  The 
system relies on cryptographic techniques for secure recording of transactions.  Blockchains or 
distributed ledgers can also record “smart contracts,” essentially computer programs designed to 
execute the terms of a contract when certain triggering conditions are met. 

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8 

assets has grown exponentially, and the announcement of the listing of a crypto asset, including a 

crypto asset security, often causes that asset’s price and trading volume to rise.   

22. On secondary trading platforms, crypto assets are tradeable for other crypto assets 

(such as Bitcoin) or fiat currency, i.e., legal tender issued by a country. 

23. The offers and sales of crypto assets must be registered with the SEC if they are 

offers and sales of securities, which the Securities Act defines to include an “investment 

contract,” i.e., if it constitutes an investment of money, in a common enterprise, with a 

reasonable expectation of profit derived from the efforts of others.  See SEC v. W.J. Howey Co., 

328 U.S. 293 (1946). 

FACTUAL ALLEGATIONS 

I. The Formation Of Hydrogen  

24. In December 2017, Hedgeable, an investment adviser registered with the SEC, 

spun off its fintech business and created a new, independent company called Hydrogen.  

25. Prior to creating Hydrogen, Hedgeable had come under increased regulatory 

scrutiny, including by the SEC, in connection with Hedgeable’s robo-advisory business.2  As a 

result, Hedgeable, led by Kane, its CEO and a member of the company’s board of directors 

(“Board”), began discussing internally a plan to separate the core of its business (technology, 

software, and employees) from its adviser business, in part, to insulate itself from regulatory 

oversight.  

26. Specifically, in mid-September 2017, Hedgeable began the process of pivoting its 

primary business to providing financial institution clients an API solution that would, among 

                                                 
2  Robo-advisers are digital investment advisers, platforms, or programs that provide 
automated or semi-automated investment advisory services, typically driven by algorithms and 
with little to no human supervision.  

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9 

other functions, secure data used by its clients’ mobile applications in addition to providing 

access to its data models for account and portfolio management.  As a part of that process, 

Hedgeable proposed creating a spin-off entity called “Hydrogen,” which was the name of the 

company’s API solution at the time, into which Hedgeable would transfer all of its intellectual 

property.  Around the same time, Kane informed Hedgeable’s Board that the company was going 

to run out of cash by November 15, 2017. 

27. Creating a spin-off entity (what ultimately became Hydrogen), Kane claimed at a 

September 14, 2017 Hedgeable Board meeting, would accomplish three goals:  “1. Protect the IP 

and revenue of [the spin-off] entity completely from any regulatory action”; “2. Create fresh 

momentum to raise capital, get partners, and press”; and “3. Allow [them] to get involved in 

blockchain, ICO, and other areas without being under SEC scrutiny[.]” 

28. On or around November 20, 2017, Hydrogen was incorporated in Delaware, and 

the following day, Hedgeable transferred all of its technology, intellectual property, employees, 

and assets into Hydrogen.  The spin-off by which Hydrogen was formed was completed on or 

around December 12, 2017. 

II. To Raise Needed Capital, Hydrogen And Kane Considered Fundraising Options, 
Including A Token Sale Or Distribution 

29. Throughout 2017, Hedgeable faced a worsening financial situation.  By early 

December 2017, Hedgeable had defaulted on its payroll obligations, owed its payroll provider 

$100,000, and estimated it needed $220,000 to continue its business through mid-December, 

when the company anticipated receiving $1.5 million pursuant to a convertible note it had 

secured months earlier from a customer agreeing to fund the spin-off entity, Hydrogen.  On 

December 4, 2017, Kane told a Hedgeable shareholder that the company was “out of cash, and 

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10 

[was] anxiously awaiting the spin-out to be completed in order to receive [an] investment from 

[its enterprise customer] for $1.5m in a convertible note.”   

30. As a result, and as part of the discussions leading to the decision to spin off and 

create Hydrogen, Kane and others at Hedgeable discussed ways to raise capital, including the 

creation, public distribution, and sale of a token.   

31. Towards the end of 2017, Kane led numerous internal conversations with future 

Hydrogen employees, members of Hedgeable’s Board, and investors about Hydrogen’s plan to 

sell a crypto asset called “Hydro” to the investing public, through a “token sale.”   

32. At Hydrogen’s first Board meeting on January 4, 2018, Kane provided updates on 

the Hydro “token sale/distribution” and blockchain project, including that in December 2017 

Hydrogen had completed its whitepaper describing the project and the Hydro token 

(“Whitepaper”) and demonstration videos. 

33. In the same Board update, Kane also presented the Board with “two viable 

distribution options” for the tokens after Hydrogen had “developers sign up for the Hydrogen 

API”:  (1) a token sale, such as an ICO, or (2) a so-called “airdrop” or public “giveaway.”  Kane 

summarized the pros and cons of each option in the following chart: 

 

34. In early 2018, Hydrogen and Kane opted not to pursue a traditional ICO (or label 

their offering as an ICO), to avoid “causing SEC problems.”  Instead, and as describe more fully 

herein, they devised a plan to raise capital by publicly distributing, offering, and selling Hydro, 

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11 

including to U.S. investors, through:  (1) an airdrop; (2) crypto asset “bounty programs”, 

(3) Hydrogen employee compensation, and (4) the creation of a robust secondary market on 

crypto asset trading platforms to enable Hydrogen to directly offer and sell Hydro to investors. 

III. The Hydrogen Platform And The Hydro Protocols  

35. As part of its plan to use Hydro to raise capital, Hydrogen proposed integrating 

Hydro into a software ecosystem called the “Hydrogen platform.” 

36. Hydrogen publicly described the Hydrogen platform on its website and 

Whitepaper as an “ecosystem” composed of “four layers”:  (1) the Ethereum blockchain,3 (2) the 

“Hydro protocols,” which were to be smart contracts (e.g., coded software recorded on the 

blockchain) to be used for validating user-security and user-identification, (3) applications built 

by third-party developers on top of the Hydro protocols, and (4) platforms built by commercial 

businesses on top of the preceding three layers. 

37. In or around January 2018, Hydrogen announced publicly, on its website and on 

its social media pages and channels—all of which were accessible in the United States—that it 

planned to develop and release five “Hydro protocols” in successive phases between 2018 and 

2020, with each protocol purportedly requiring Hydro to operate.  However, four of the five 

Hydro protocols were never finalized and released to the public while Hydrogen was offering 

and selling Hydro tokens. 

                                                 
3  The Ethereum blockchain is an open, or permissionless, blockchain that is a record of 
events, and that can allow for the use of “smart contracts.”  Ether (or “ETH”) is the Ethereum 
blockchain’s native token.  (Some crypto assets may be “native tokens” to a particular 
blockchain—meaning that they are represented on their own blockchain, though other crypto 
assets may also be represented on that same blockchain, as is the case with the Ethereum 
blockchain.) 

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12 

IV. Hydrogen And Kane Publicly Distributed, Offered, and Sold Hydro 

38. During the fall of 2017, Kane led the company’s Hydro-creation efforts, which 

included closely supervising testing of the Hydro token in a closed-system format, as well as 

instructing others to create and review videos explaining how the Hydro token integrated into the 

Hydrogen platform. 

39. In early January 2018, under Kane’s direction, Hydrogen minted a finite supply of 

11,111,111,111 Hydro tokens.  The Hydro token is an ERC-20 standard token on the Ethereum 

blockchain.4   

40. In its materials publicly marketing and promoting the Hydro token, Hydrogen and 

Kane told potential investors that a significant percentage of minted Hydro would be set aside for 

the company and its development team.  For example, in a January 18, 2018 post on Hydrogen’s 

thread on bitcointalk.org, Hydrogen stated that 20% of the token supply would be reserved for 

the company in “a treasury,” and another 30% would be reserved for the company’s 

development team.   

41. Later, in a May 18, 2018 post on Hydrogen’s Medium blog, titled “Understanding 

The Hydro Token Distribution,” Hydrogen stated that 35% (nearly 3.89 billion Hydro) had been 

allocated to the company’s repository and 26% (just over 2.92 billion Hydro) to its current 

internal developer team, with another 5% set aside for the company’s future internal 

development team.  

42. Hydrogen and Kane publicly marketed Hydro as a so-called “utility” token on the 

company’s website and its social media pages and channels, initially claiming that it would 

                                                 
4  ERC-20 is a standard protocol (or technical specification of the type of crypto token) 
currently used by a majority of issuers on the Ethereum blockchain to create tokens that are 
represented on the Ethereum blockchain. 

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13 

function as an “API key” within Hydrogen’s existing non-blockchain API business.  However, at 

no point during the Relevant Period, including during the offers and sales of Hydro, could the 

token be used within Hydrogen’s existing non-blockchain API. 

43. Hydrogen’s and Kane’s plan to distribute, offer, and sell the Hydro token 

proceeded in four overlapping phases: 

a. The Hydro airdrop was the first phase of Hydrogen’s and Kane’s plan to 

publicly distribute, offer, and sell Hydro tokens.  It began in January and ran through February 

20, 2018.  Kane directed the marketing and execution of the Hydro airdrop, including directing 

the creation of the airdrop application on Hydrogen’s website and providing certain Hydrogen 

shareholders and others with instructions on how to sign up for the airdrop.  Hydrogen’s and 

Kane’s goal in carrying out the airdrop was to widely disseminate and promote the Hydro token 

to create a broad secondary market for Hydro, into which the company could later sell its Hydro 

for profit.  Hydrogen never placed any restriction on the resale of airdropped, or indeed any 

other, Hydro tokens.  On February 19 and 20, 2018, Hydrogen airdropped, or distributed, 

approximately 2.6 billion Hydro tokens to over 11,000 “developers.” 

b. In late February and again in May 2018, Hydrogen offered Hydro through 

bounty programs, pursuant to which Hydrogen paid Hydro to participants in exchange for 

completing bounty tasks promoting Hydro and the Hydrogen platform. 

c. From mid-February through October 2018, Hydrogen and Kane 

distributed approximately 2.9 million Hydro to Hydrogen employees as part of their employment 

compensation. 

d. Just days after the airdrop concluded in February 2018, Hydrogen and 

Kane began their efforts to have Hydro “listed,” or made available for trading, on various crypto 

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asset trading platforms.  Hydrogen and Kane publicly announced each new listing on the 

company’s social media page and channels and in emails to Hydro token holders.  Beginning in 

May 2018, Kane began selling Hydro from the company’s repository to raise much-needed 

capital, and, in October 2018, hired Moonwalkers to sell Hydro on crypto asset trading 

platforms, to keep the price of the token afloat and ensure that the company’s sale of its Hydro 

would be more profitable. 

44. As set forth more fully below, the Hydro tokens that Hydrogen and Kane 

distributed, offered, and sold through bounty programs, as employee compensation, and on 

crypto asset trading platforms, including through Ostern, were offered and sold as investment 

contracts and thus securities.  Each of these three phases of Hydrogen’s and Kane’s plan to 

distribute, offer, and sell Hydro is addressed in turn. 

A. Hydrogen’s Distribution, Offer, And Sale Of Hydro Tokens To Bounty 
Program Participants 

45. Concurrent with the Hydro airdrop, beginning on or around January 25, 2018, 

Hydrogen and Kane implemented a bounty program, whereby airdrop recipients could receive 

payments of additional Hydro in exchange for completing certain promotional tasks, such as 

translating the Whitepaper and other documents from English into other languages.   

46. At Kane’s direction, Hydrogen advertised the bounty program on its website and 

other online forums. 

47. In promoting the bounty programs and, more broadly, the Hydro token and 

Hydrogen platform, Hydrogen and Kane emphasized the professional expertise and success of 

the Hydro team by including their biographies, which featured previous work experiences at top 

investment banks and consulting firms, awards received in the fintech space, their expertise in 

“crypto-assets,” speeches Kane was giving on the “power of the public blockchain to thousands 

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of European tech entrepreneurs,” and the expected impact that the Hydrogen platform would 

have in the financial services ecosystem.  Hydrogen touted this information on the company 

website and in other Hydrogen protocol marketing materials. 

48. At Kane’s direction, Hydrogen “hosted” its bounty campaign, called “Project 

Hydro,” on Bounty0x, a popular crypto asset bounty-hunting platform.  The Project Hydro 

bounty campaign on Bounty0x consisted of eight different bounties, each with its own assigned 

bounty task and allotted Hydro token “reward.”  For example, one bounty available as of January 

29, 2018, was the “Reddit Bounty” pursuant to which bounty program participants would receive 

Hydro in exchange for “upvoting” (or signaling approval or, in Facebook parlance, “liking”) “all 

posts” made by or from Hydrogen’s Project Hydro account “for a week.” 

49. To participate in the bounty program, participants were required to sign up on 

Bounty0x and provide their prior airdrop user credentials.  On completion of the bounty tasks, 

participants were required to submit proof of completion, and, upon Hydrogen’s approval, the 

company distributed Hydro to the bounty participants’ digital wallets. 

50. In February 2018, Hydrogen distributed at least 238,666 Hydro to 177 bounty 

program participants in exchange for the services they provided to Hydrogen. 

51. Beginning in May 2018, Hydrogen, at Kane’s direction, implemented a second 

bounty program.  Pursuant to this second bounty program, developers called “Decentralization 

Ambassadors” (“DAs”) could and were expected to market and promote Hydro and the 

Hydrogen platform across various online social media platforms and channels, monitor those 

platforms and channels, and identify potential Hydro use-applications (or “dApps”) for social 

media discussion.   

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52. In exchange for completing these tasks (or as Hydrogen called them “duties”), 

DAs would, and did, receive Hydro.  For example, in a July 9, 2018 post on its Medium blog, 

Hydrogen told potential DAs that they would receive 222,222 Hydro per month over 24 months. 

53. One of the bounty tasks DAs could complete was “[b]ringing and onboarding new 

developers into the [Hydrogen] ecosystem,” to whom Hydrogen would distribute Hydro. 

54. Between at least August and November 2018, Hydrogen distributed 35,434,611 

Hydro to 19 DAs as part of this program. 

55. As with the airdropped Hydro, neither Hydrogen nor Kane placed any restriction 

on the resale of Hydro distributed to the participants in either of the two bounty programs. 

B. Hydrogen’s Distribution, Offer, and Sale Of Hydro Tokens To Its Employees 
As Compensation 

56. In February 2018, as part of its plan to raise capital via distribution of Hydro, 

Hydrogen and Kane set aside about 3.4 billion Hydro to be issued to company employees. 

57. Beginning in mid-February 2018, Hydrogen distributed approximately 2.9 billion 

Hydro to its employees as part of their compensation for 2018.   

58. The initial distribution occurred on February 16, 2018, and included the 

distribution of approximately 1.38 billion Hydro to each of Kane and his brother, Hydrogen’s co-

founder and Head of Product (and current CEO), and approximately 278 million Hydro to each 

of Hydrogen’s Blockchain Engineer and Head of Financial Engineering.  

59. Later, beginning in May 2018, Hydrogen distributed approximately 150 million 

Hydro to approximately 25 of its employees, company-wide.  This distribution was not limited to 

Hydrogen’s internal development team, contrary to what Hydrogen and Kane had said publicly 

about reserving a percentage of the minted tokens only for that team.  

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60. As with the Hydro distributed via Hydrogen’s airdrop and bounty programs, 

neither Hydrogen nor Kane placed any formal resale restrictions on the Hydro tokens distributed 

to company employees. 

61. At the time of the May 2018 company-wide distribution, Hydrogen’s external 

auditors, with assistance from Kane and others at Hydrogen, valued the Hydro token at 

approximately 0.4621 cents per token.  By contrast, at the time of the February 16, 2018 grant to 

Kane, his brother, and two others, Hydro was valued by the company’s external auditors at 

approximately 0.000529 cents per token.  This difference in valuation was due primarily to the 

Hydro token’s resale value on secondary trading markets as a result of Hydrogen’s and Kane’s 

efforts to have Hydro listed on several crypto asset trading platforms, described further below.  

Indeed, by the time of the May 2018 company-wide distribution, Hydro had already been listed 

on several crypto asset trading platforms. 

C. Hydrogen And Kane Created A Trading Market For And Promoted The 
Profit Potential Of Hydro Tokens 

62. Almost immediately after the airdrop concluded in February 2018, Hydrogen and 

Kane began their efforts to have Hydro listed on several crypto asset trading platforms. 

63. Upon receipt of the airdropped Hydro on February 19-20, 2018, Hydro token 

holders were asking, on Hydrogen’s Telegram channel and other social media pages, if and when 

the Hydro token was going to be listed on crypto asset trading platforms.   

64. As part of the company’s listing efforts, Hydrogen and Kane encouraged 

members on the Hydrogen Telegram channel to vote or petition for Hydro to be listed on crypto 

asset trading platforms. 

65. Kane spearheaded Hydrogen’s efforts to list Hydro by identifying, filling out, and 

submitting listing applications to various crypto asset trading platforms, and liaising with their 

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representatives.  Hydrogen and Kane used a strategy of listing Hydro on as many low-trading-

volume platforms as possible in order to able to eventually have Hydro listed on larger-volume 

and more-established trading platforms. 

66. Hydrogen’s listing efforts resulted in Hydro being listed on at least 17 crypto 

asset trading platforms, including on March 22, March 30, April 24, and August 28, 2018. 

67. Hydrogen’s official Twitter account publicly announced each new listing and 

repeatedly advertised that the Hydro token was available for trading on multiple crypto asset 

trading platforms, including two popular, high-volume platforms, one of which is based in the 

United States.   

68. Hydrogen also announced each new listing in its public Telegram channel, on 

Reddit, and through weekly update emails to its growing community of token holders, including 

those who had received Hydro via airdrop.  Kane drafted each of these new listing 

announcements. 

69. For example, in the April 2, 2018 weekly update email to Hydro token holders 

that Kane drafted, Hydrogen and Kane told Hydro token holders that certain crypto asset trading 

platforms had “added” Hydro on their platforms.   

70. Kane deliberately chose to use the word “added” rather than “listed,” because he 

understood that “listing” a crypto asset on a trading platform, like listing equity stocks on an 

exchange, would make that crypto asset more likely to be viewed by investors as an 

investment—and thus a security.  In fact, in a March 21, 2018 internal conversation held via 

Slack, an online messaging application, Hydrogen’s Head of Financial Engineering wrote Kane: 

“@Mike, we have a couple options.  (1) we can sort of contradict what we’ve stated before and 

now announce we’re listing on exchanges for X reason . . . or (2) we can have a random person 

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who is not us make a post saying ‘looks like Hydro is now trading on X exchange[.]”  In 

response, Kane wrote: “well I think we just say ‘x platform’ has added Hydro rather than ‘we 

listed it’ and keep saying that everytime, non-chalantly . . . I don’t think we have to give any 

reason[.]” 

71. While Hydrogen and Kane worked to have Hydro listed on crypto asset trading 

platforms, the company fielded numerous questions on its social media pages and channels from 

Hydro recipients and purchasers about the token’s value and whether and when Hydrogen 

expected the token’s price to increase. 

72. At Kane’s direction, Hydrogen created a set of scripted responses to these 

questions, being careful not to expressly state that the Hydro token would increase in value.  

Nevertheless, in conversations as early as April 24, 2018, Kane led at least one Hydro investor 

(and a member of Hydrogen’s Board) to believe that Hydro “WILL have value.”   

73. Indeed, in a February 17, 2018 email, the same investor and Board member wrote 

to Kane: “[a]s everyone has acknowledged that these digital assets [Hydro] may accrete in value 

over time, your contention that this [the airdrop] was merely a software delivery is tenuous.”   

74. A few days later, at a Hydrogen Board meeting, the same investor and Board 

member insisted several times that it was “ridiculous” for Hydrogen to continue to claim Hydro 

tokens had no value.   

75. When asked about the value of Hydro on a Reddit Ask-Me-Anything (“AMA”) 

thread on May 12, 2018, Hydrogen responded, “Our team has been working very hard to 

increase awareness [of the token and the platform] through reddit, medium, twitter and telegram.  

We have seen amazing success so far . . . .”   

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76. Also, in May 2018, Kane appeared on a podcast and claimed that Hydrogen was 

very profitable and was “growing very very very fast,” signaling that its efforts to develop the 

Hydrogen platform were on track. 

77. In addition, in an October 2018 post on its Medium blog, Hydrogen touted the 

variety of applications that purportedly could be developed using Hydro on the platform and 

emphasized that “the digital advertising market now produces over $88 billion in revenue.” 

78. Further, Hydrogen sought to create the appearance of demand for, and thus an 

increase in value of, Hydro by claiming that its financial institution clients—who utilized only 

the company’s non-blockchain API, for which Hydro had no functionality—could use Hydro to 

access and use certain Hydrogen platform functions.   

79. For example, in the May 1, 2018 weekly email update to Hydro token holders, 

Hydrogen and Kane told investors they would soon announce “dozens of companies integrating 

Hydro API and using our Hydro app”, as well as additional partnerships and “new exchange 

platforms.” 

80. Likewise, when asked in the May 12, 2018 Reddit AMA thread if the company 

was “in talks with any financial institutions that are interested in utili[z]ing a Hydro blockchain 

token based solution”, Hydrogen responded that many of its clients were interested and added, 

“[w]e are confident that our product is attractive enough to be used by them and we have a major 

advantage with them already paying for our other products.”  In the same AMA thread, when 

asked if any existing API clients had inquired about Hydro, Hydrogen replied, that “all” of its 

clients were “interested” in and “talking to [the company] about Hydro.” 

81. However, as Kane acknowledged in a private communication with Ostern in late-

January 2019, Hydrogen’s “API clients” were not required to use Hydro in any part of the 

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Hydrogen platform.  Ostern replied, “Oh really?  So everything is Fiat [currency] and the token 

has no real utility?”—to which Kane responded, “not right now . . . .” 

82. Nevertheless, Hydrogen repeatedly touted its growing number of non-blockchain 

API partnerships with major financial institutions to signal the growth of the Hydrogen platform 

and increased demand for the Hydro token.   

83. For example, on March 2, 2018, Hydrogen’s Blockchain Engineer stated on the 

company’s Telegram channel that “adoption of this [Hydro] token will be valuable to us as we 

convince companies to use it [on the platform] alongside our other products,” thereby reinforcing 

that the value of the token was linked to and in fact depended on the company’s efforts to grow 

the Hydrogen platform. 

84. Further, once Hydro became listed and available for trading, Hydrogen and Kane 

routinely informed their community of token holders when Hydro’s trading volume was highly 

ranked on specific crypto asset trading platforms. 

85. Hydrogen and Kane also publicly stated that Hydrogen did not sell Hydro to its 

API clients because “they are purchasing [Hydro] on their own” on the secondary market. 

86. While Hydrogen and Kane were seeking to have Hydro listed on crypto asset 

trading platforms and after the token was available for trading, Hydrogen continued to highlight 

its management and development teams, in particular their prior experience at hedge funds and 

large financial institutions and with launching another fintech company. 

87. As part of their strategy to increase the demand for and value of Hydro, Hydrogen 

and Kane disseminated news and updates about the company, its platform development, the 

public distribution of the Hydro token, and the trading market for Hydro.  Kane then intended to 

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capitalize on Hydro’s increased value by selling the company’s Hydro at inflated prices to raise 

funds for the company. 

V. Kane And Hydrogen Hired Moonwalkers To Manipulate The Price And Volume Of 
Hydro And Reap Greater Profits From The Offers And Sales Of The Company’s 
Hydro  

88. In May 2018, Kane told Hydrogen’s Board that the company was going to run out 

of cash by October of that year.  This was consistent with what Kane had told the Board earlier, 

in February 2018—that the company had cash on hand to sustain operations for approximately 8 

to 10 months from then. 

89. To raise capital, Kane told the Board at the May 2018 meeting that the company 

would have to sell about $1 million worth of Hydro, either in a private sale to a venture capital 

firm, hedge fund, or asset manager, or publicly into the secondary trading market Hydrogen and 

Kane had created and were continuing to create. 

90. Later, on or around July 12, 2018, Kane proposed a fundraising plan to 

Hydrogen’s Board to sell $1-5 million in Hydro from the company’s repository and into the 

secondary market to raise revenue. 

91. However, Kane had already begun selling Hydro from the company’s repository, 

using his own personal trading accounts with crypto asset trading platforms, two months earlier, 

in May 2018.  Between May 9 and October 7, 2018, Kane sold 472,141,735 Hydro 

(approximately 4.25% of the total minted supply) from Hydrogen’s repository using his personal 

trading accounts. 

92. Kane did so despite the fact that he and Hydrogen publicly stated, in a May 18, 

2018 Medium blog post, that Hydrogen had no plans to distribute any of its Hydro and that, in 

the event of a planned distribution from the repository, the company would “alert the Hydro 

community with 30 days[’] notice.”   

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93. However, at no point did Hydrogen or Kane disclose Kane’s selling of Hydro 

from the company’s repository, or Ostern’s subsequent sales of the company’s Hydro.  In fact, in 

April 2018, Kane told one U.S.-based crypto asset trading platform on which Hydro was later 

listed that the company would only sell its tokens as needed to pay for Ethereum costs tied to the 

Hydrogen platform. 

94. After Kane began selling the company’s Hydro through his personal trading 

accounts with crypto asset trading platforms, he quickly learned that the considerable volume of 

Hydro that Hydrogen needed to sell to raise sufficient cash would significantly depress, and did 

significantly depress, Hydro’s price on the secondary market thus making it difficult to raise 

such funds.  

95. As a result, in July 2018, Kane began searching for a crypto asset “market 

making” firm to use the company’s Hydro to create the appearance of increased Hydro trading 

volume on the secondary market, and prop up Hydro’s price so that the company could sell its 

Hydro into that market without significantly depressing the token’s price, and enabling Kane and 

Hydrogen to raise their desired capital.  

96. In late July and again in August 2018, Kane informed Hydrogen’s Board that the 

company would begin searching for “above board market makers” to help put forward a realistic 

token sale strategy. 

97. During that same timeframe, Kane directed two members of Hydro’s core team to 

preview the services provided by a list of “market makers” he compiled after conducting his own 

preliminary research and reviewing the websites and marketing materials of the firms he had 

identified—including Moonwalkers. 

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98. The name “Moonwalkers,” which Ostern selected, derives from the expression 

“going to the moon,” which is used by crypto enthusiasts and issuers to describe the potential 

significant appreciation in price or value of crypto assets. 

99. On its website at the time, Moonwalkers described its services as follows:  

We work closely with your teams to ensure our market making 
efforts are even more effective….We then create stability while we 
subtly direct the Coin or Tokens[’] price and volume upward; using 
our in-house software solutions. 

Using our in-house software, we are able to transact thousands of 
trades a second.  This allows us to create volume in such a way that 
has been unheard of in the space.  (Don’t worry, we’ve gone to great 
lengths to ensure that our strategies in doing so, look as organic 
as possible.  They are ind[is]cern[i]ble from organic trades.) 

We’ve developed strategies to sell your tokens in such a way that 
does not harm the market price of your coin/token while making 
market.  (In fact, we sell in such a way that actually facilitates 
upward movement!). 

100. On or around August 6, 2018, Ostern provided a demonstration of Moonwalkers’ 

“in-house software” to Hydrogen employees, after which one employee, Hydrogen’s Blockchain 

Engineer, informed Kane over email, “[t]hey seem to have a pretty robust trading bot”—a 

computer program used to automate trades.  In the same email, Hydrogen’s Blockchain Engineer 

told Kane, “[t]hey would be providing the liquidity and market making to make sure our selling 

doesn’t lower the price” of the Hydro token.   

101. In an email on September 17, 2018, just weeks before Kane had projected 

Hydrogen would run out of cash, Kane instructed Hydrogen’s Head of Financial Engineering to 

“get the market making firm(s) set[]up for October 1.”   

102. After comparing Moonwalkers’ proposed cost and the quality of its trading bot to 

the other market making firms under consideration by Hydrogen, Kane signed off on retaining 

Moonwalkers on or around October 1, 2018. 

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103. On October 4, 2018, Hydrogen and Moonwalkers executed a Market Making 

Services Agreement, pursuant to which Moonwalkers would provide “market making” and other 

services for a fixed fee of $9,000 per month beginning October 9, 2018.  Ostern signed the 

agreement on behalf of Moonwalkers.  Ostern was ultimately compensated by Hydrogen in 

exchange for his “market making” services. 

104. Pursuant to that agreement, Moonwalkers agreed, among other things, to “provide 

market making services” to Hydrogen and sell the company’s Hydro tokens—while “devaluing 

the price of [Hydro] as little as possible”—on two specified crypto asset trading platforms, 

including one based in the U.S.  As part of the agreement, Hydrogen also provided 5 Bitcoin to 

Moonwalkers to carry out these services.  The agreement also authorized Moonwalkers to use 

Hydro-trading proceeds to carry out its “market making” services.  At the conclusion of the 

contract, Moonwalkers was required to return the 5 Bitcoin and all trading proceeds, less any 

trading fees incurred.  

105. As a result, between October 2018 and April 2019, Ostern and Moonwalkers—at 

Kane’s direction and with Hydrogen’s knowledge—used the company’s Hydro to manipulate the 

price and trade volume of Hydro, in order to induce crypto asset traders to purchase Hydro and 

enable Ostern to sell the company’s Hydro at a greater profit.  

106. To initiate Ostern’s and Moonwalkers’ “market making” on behalf of Hydrogen, 

Kane provided Ostern with the login credentials to access his personal trading accounts on the 

two specified crypto asset trading platforms, one of which Kane had recently upgraded to a 

“corporate” account that could facilitate higher trading volume and faster token sales.  In 

addition, Kane transferred, and directed others at Hydrogen to transfer, Hydro from the 

company’s repository, as well as Bitcoin and ETH, to the two trading accounts used by Ostern. 

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107. Ostern and Moonwalkers created a customized trading bot for Kane and 

Hydrogen to create the appearance of active trading in Hydro and to allow Ostern to sell the 

company’s Hydro on trading platforms without depressing the token’s price.   

108. Moonwalkers’ trading bot deployed a mix of automatic and semi-automatic 

functions to place-and-cancel buy and sell orders at random increments to create the false 

appearance of robust market activity, which was intended by Kane, Hydrogen, and Ostern to 

induce other market participants to trade Hydro.   

109. The artificially-inflated trading volume created by Ostern, at Kane’s direction, 

enabled Ostern to sell Hydro from Hydrogen’s company repository into the secondary crypto 

market with minimal impact on Hydro’s price.   

110. Further, Ostern manually executed the Moonwalkers bot’s semi-automatic 

options, including by setting trade limits to carry out limit orders, which are orders to purchase or 

sell a security at a pre-specified price or better.   

111. In addition, Ostern manipulated the Hydro market by placing multiple orders to 

buy or sell Hydro that Ostern never intended to execute, i.e., non-bona fide or what Ostern 

termed “zombie” orders.”  These non-bona fide or “zombie” orders were intended to create the 

false appearance of market interest and increase Hydro’s price so that Ostern could then execute 

bona fide orders—selling the company’s Hydro—at more favorable prices.  After executing his 

bona fide orders at the manipulated prices, Ostern would cancel and clear his prior “zombie” 

orders from the U.S. trading platform’s limit-order pools.  In fact, in an October 9, 2018 email, 

Moonwalkers asked for Kane’s assistance in “manually clearing zombie orders”, to which Kane 

replied, “[w]e’re online all day and night, so it’s not an issue.” 

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112. Ostern described this manipulative trading strategy as “spoofing.”  Spoofing or 

“layering” refers to the use of fake or non-bona fide orders in a particular security to push the 

market for that security in a particular direction and obtain a more favorable execution of bona 

fide orders on the opposite side of the market—at which point the non-bona fide orders are then 

cancelled. 

113. From the outset, in October 2018, Kane and Hydrogen provided input on the 

trading bot’s objectives, instructing Moonwalkers to sell 200-400 million Hydro (approximately 

1.8-3.6% of the total minted supply) per month, or an average of about 10 million per day, and to 

sell as much as Hydro as it could while keeping the price of the token afloat, thereby enabling 

Hydrogen and Kane to profit from sales of the company’s Hydro.   

114. Specifically, Kane provided the monthly Hydro sales target to Ostern in an 

October 13, 2018 email.  In the same email, Kane told Ostern that, with his trading of the 

company’s Hydro, he would convert Hydro sales proceeds from Bitcoin to U.S. dollars and 

transfer that money to Hydrogen’s bank account, but offered to leave “extra” Bitcoin in his 

trading platform account to be used by Ostern to “make” and manipulate a market in Hydro.  

Kane concluded his email by reiterating his and Hydrogen’s objective: “to raise cash through 

these sales.” 

115. In his reply email the same day, Ostern told Kane he “[u]nderstood” the monthly 

sales target and added: “We’re constantly playing both sides to get the price to move upward.  

[Hydro] get sold into a bit but cancel after a certain percentage is filled to ensure that we’re not 

buying back all the tokens we just sold.”  And, with respect to Kane’s offer to leave “extra” 

Bitcoin in his trading platform account, Ostern replied: “yeah definitely try to keep a little in 

there for manipulation if you can per month.”  In that reply email, Ostern also told Kane that he 

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would “slowly ramp things up over time” so that they could “have a larger amount of liquid 

capital rotating through for profit, as well as subtly moving the price [of Hydro] upward.” 

116. In addition to directing Ostern regarding the target volume of Hydro to be sold 

and conveying to him their trading objectives, Kane and Hydrogen also directed and participated 

in the scheme by continuously allocating Hydro (and Bitcoin and ETH) for Ostern to use and 

holding regular calls with Ostern to ensure their objectives were being met. 

117. Further, as part of the market manipulation scheme, Hydrogen and Moonwalkers 

maintained a private Slack channel through which Ostern provided Kane and Hydrogen with 

updates about his efforts to artificially inflate Hydro’s trading volume and prop up the price of 

the token on the two trading platforms. 

118. For example, on October 11, 2018, Ostern wrote the following to Kane in the 

private Hydrogen-Moonwalkers Slack channel:  

We’re starting off slow, trying to keep the sell pressure minimal 
until we can build enough capital to really get the market moving 
upward.  Down the road a little ways we’ll try and keep you guys at 
the top of CMC5 / Exchange Lists.  Try not to push too hard on 
selling now, we’ll have plenty of excuses to pump price and sell 
into the FOMO6 guys down the road.  Not to mention high volume 
days. 

119. A week later, on October 18, 2018, Ostern wrote to Kane: “We get into the 

[online] trade chats and kind of try and fomo people in.  (And talk you up in chat).”   

                                                 
5  CMC, or CoinMarketCap, is an online platform that ranks crypto assets by trading 
volume.  

6  In the crypto asset space, “FOMO” or “fear of missing out” typically refers to a sharp 
increase in the price of a crypto asset occurring where investors “fear” that they may lose out on 
profiting from the remainder of a “bullish breakout,” when a crypto asset’s price moves above its 
previously established resistance level (a price point at which an asset encounters considerable 
selling pressure), signaling a trend upward. 

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120. On October 21, 2018, Ostern updated Kane again:  

Set the bot pretty aggressively now that we’ve got a little more 
capital to play with.  Now using the [C]huck [Norris] account [on 
Hydrogen’s Telegram channel] to spread the news a bit . . . Hop on 
a call quick Mike?  Have a tactic we’ve used a few times that works, 
I’d like to explain a bit.  Basically we’re going to insight [sic] a 
firesale to shake the weak hands, and get the sell walls to move 
down a bit so we gain position then push price hard. 

121. The same day, upon Ostern setting the bot aggressively and touting Hydro on 

Telegram, Hydro’s market volume increased from less than 5 million Hydro to a peak of over 15 

million as a result of the buy order pressure exerted by the Moonwalkers’ bot between 12:00 

p.m. and 3:00 p.m. ET. 

122. On October 26, 2018, Ostern and Kane communicated on the private Hydrogen-

Moonwalkers Slack channel about Ostern’s efforts to increase Hydro’s trading volume, at 

Kane’s direction.  Specifically, Ostern wrote to Kane: “Did a little volume shenanigans . . . #1 

volume on [the U.S.-based trading platform] . . . Around half is fake, took about 3 seconds for 

bot to generated [sic] about a million.”  Kane responded, “Yes saw that, lots of volume.  It helps 

to attract other exchanges, we get 1-2 a week now to reach out.” 

123. Between October 8, 2018, and January 31, 2019, Kane’s account at the U.S.-

based trading platform was consistently in the top 3 of daily Hydro traders, often accounting for 

more than 50% of all daily buy and sell order and cancellation volume, up from the average of 

less than 5% prior to when Moonwalkers’ began trading.   

124. During the same period, Kane’s account with the same U.S. trading platform 

typically had a fill rate7 of 3% to 15%, which was low, due at least in part to the large number of 

non-bona fide or “zombie” orders Ostern placed and cancelled. 

                                                 
7  A “fill rate” measures the number of units executed as a fraction of the units ordered. 

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125. While Ostern was manipulating the market in Hydro and selling Hydrogen’s 

Hydro tokens through Kane’s crypto asset trading platform accounts, Kane continued to sell 

Hydro through new, separate trading accounts he created.   

126. Neither Kane nor Hydrogen ever publicly disclosed Kane’s or Ostern’s sales of 

Hydro from the company’s repository. 

127. In January 2019, in Hydrogen’s internal “Kickoff Video,” Hydrogen told its 

employees that the company had achieved revenue of over $2 million from “property sales” in 

2018.  In fact, this amount represented Hydrogen’s sales of Hydro in the secondary market 

through Moonwalkers and Kane.   

128. Hydrogen’s financial statements for 2018 and 2019, which were not filed with the 

SEC or otherwise publicly disclosed, reflected a total of approximately $2.22 million in 

“cryptocurrency revenue.” 

129. The cash raised through Ostern’s sales of Hydro, at Kane’s direction and on 

Hydrogen’s behalf, permitted the company to continue operations and forgo the need to raise 

capital from other sources. 

130. By engaging in the market manipulation described above, Ostern, Kane, and 

Hydrogen knew, or were reckless in not knowing, they were engaged in manipulative, deceptive, 

and fraudulent conduct, because Ostern’s sales of Hydro and market manipulation—carried out 

at Kane’s and Hydrogen’s direction and with their knowledge and active participation—were 

intended to create the false appearance of robust Hydro trade volume and artificially prop up the 

token’s price, in order to induce market participants to trade in Hydro and ensure that Hydrogen 

reaped greater profits from the sales of its Hydro tokens. 

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VI. Defendants Offered And Sold Hydro Tokens As Investment Contracts, And These 
Offers And Sales Of Securities Were Not Registered With The SEC 

131. Hydrogen and Kane offered and sold Hydro as investment contracts, or securities, 

through Hydrogen’s bounty programs and employee compensation, and through Defendants’ 

offers and sales of Hydro in the crypto asset trading market.   

132. Moonwalkers also offered and sold Hydro as an investment contracts through 

crypto asset trading platforms.  By selling Hydro tokens on behalf of Hydrogen and Kane, Ostern 

played a substantial role in, and indeed was an essential part of, Hydrogen’s scheme to offer and 

sell Hydro, and at a minimum Ostern engaged in steps necessary to the distribution of Hydro.  

133. Notwithstanding their attempts to circumvent the federal securities laws’ 

registration requirements, Hydrogen and Kane marketed Hydro as an investment in Hydrogen’s 

enterprise.  The economic reality and substance of what Hydrogen and Kane were offering and 

selling—investments in Hydro—was clear.  Hydro purchasers would have reasonably expected, 

and were led by Hydrogen and Kane to expect, to profit from Hydrogen’s stated efforts to 

develop the Hydrogen platform and list Hydro on trading platforms. 

134. First, the offers and sales of Hydro tokens by Hydrogen and Kane, including 

through Ostern, involved an investment of money.  Those who purchased Hydro on trading 

platforms, including U.S. investors, paid with U.S. dollars or with Bitcoin and ETH.  Further, 

Hydrogen employees and bounty program participants obtained Hydro in exchange for the value 

of their labor, services, and efforts to market, promote, and develop the Hydrogen platform. 

135. Second, Hydro purchasers invested in a common enterprise because their fortunes 

were tied to those of other Hydro investors, and to those of Hydrogen and Kane.   

136. Hydro investors’ fortunes were tied to each other, because if Hydro increased in 

value, all investors would share in that increased value on a pro rata basis.  Hydro investors also 

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had a shared interest in the growth of the Hydrogen platform and thus the demand for and value 

of Hydro, which was inextricably linked to the development of the platform.  In addition, the 

proceeds of Hydrogen’s and Ostern’s sales of Hydro on crypto asset trading platforms were 

pooled in Hydrogen’s accounts.   

137. Hydro investors’ fortunes were also tied to those of Hydrogen and Kane.  For 

example, because Hydrogen, Kane, and other company employees held approximately 65% of 

the total pool of Hydro in circulation, including 35% in the company’s repository, their interest 

in Hydro appreciating in value was aligned with, and indeed the same as, that of Hydro investors. 

138. Third, Hydro investors were led by Hydrogen and Kane to reasonably expect that 

they would receive profits from their Hydro investments based on the managerial efforts of 

others, including Hydrogen and Kane.  As Hydrogen and Kane made clear in Hydrogen’s public 

promotional and marketing materials and on its website and social media pages and channels, the 

value of Hydro depended entirely on Hydrogen’s and Kane’s efforts, including to develop and 

manage the Hydrogen platform.  In marketing Hydro, Hydrogen and Kane repeatedly touted 

Hydrogen’s profitability, accelerated growth, and the Hydrogen team’s blockchain and fintech 

expertise and experience.  They also touted its “long-standing relationships” and partnerships 

with major financial firms as part of the company’s non-blockchain API business.   

139. Hydrogen and Kane also led Hydro investors to reasonably expect to profit from 

their Hydro investments by publicly touting the results of their efforts to have Hydro listed on 

trading platforms, where investors would be able to sell their Hydro at a profit.  For example, as 

discussed above, Hydrogen publicly announced each new platform listing of Hydro on its social 

media pages and channels, signaling to investors the opportunity to profit from sales on those 

platforms. 

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140. Sections 5(a) and 5(c) of the Securities Act require an offeror of securities to 

register its offers and sales of securities with the SEC.  Hydrogen’s and Kane’s offers and sales 

of the company’s Hydro tokens, as well as Ostern’s sales for the company, were not registered 

with the SEC, and no registration exemption was available. 

FIRST CLAIM FOR RELIEF 
Violations of Section 5(a) and 5(c) of the Securities Act 

(All Defendants) 
 

141. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

142. By reason of the conduct described above, without a registration statement in 

effect as to that security, Defendants, directly and indirectly, (a) made use of the means and 

instruments of transportation or communications in interstate commerce or of the mails to sell 

securities through the use or medium of any prospectus or otherwise, and (b) made use of the 

means and instruments of transportation or communication in interstate commerce or of the 

mails to offer to sell through the use or medium of a prospectus or otherwise, securities as to 

which no registration statement had been filed. 

143. Hydrogen violated Sections 5(a) and 5(c) of the Securities Act by, from as early 

as January 2018 through at least April 2019, directly and indirectly making use of the means and 

instruments of transportation or communications in interstate commerce or of the mails to offer 

and sell Hydro tokens, via bounty programs, employment compensation, and sales in the 

secondary trading market, without a registration statement in effect as to any offers or sales of 

Hydro, and by making use of the means and instruments of transportation or communication in 

interstate commerce or of the mails to offer to sell Hydro tokens, which were offered and sold as 

securities, as to which no registration statement had been filed.  

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34 

144. Kane violated Sections 5(a) and 5(c) of the Securities Act by, from as early as 

January 2018 through at least April 2019, directly and indirectly making use of the means and 

instruments of transportation or communications in interstate commerce or of the mails to offer 

and sell Hydro tokens, via bounty programs, employment compensation, and sales in the 

secondary trading market, without a registration statement in effect as to any offers or sales of 

Hydro, and by making use of the means and instruments of transportation or communication in 

interstate commerce or of the mails to offer to sell Hydro tokens, which were offered and sold as 

securities, as to which no registration statement had been filed. 

145. Ostern violated Sections 5(a) and 5(c) of the Securities Act by, from as early as 

October 2018 through at least April 2019, directly and indirectly making use of the means and 

instruments of transportation or communications in interstate commerce or of the mails to offer 

and sell Hydro tokens, via sales of Hydrogen’s Hydro tokens in the secondary trading market 

using Kane’s personal trading accounts with crypto asset trading platforms, without a registration 

statement in effect as to any offers or sales of Hydro, and by making use of the means and 

instruments of transportation or communication in interstate commerce or of the mails to offer to 

sell Hydro tokens, which were offered and sold as securities, as to which no registration 

statement had been filed. 

146. By virtue of the foregoing, Defendants violated, and unless enjoined will continue 

to violate, Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a), (c)]. 

SECOND CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act and Rules 10b-5(a) and 10b-5(c) 

(All Defendants) 
 

147. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

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35 

148. By reason of the conduct described above, Defendants, directly or indirectly, 

acting intentionally, knowingly or recklessly, in connection with the purchase or sale of 

securities, by the use of the means and instruments of interstate commerce or of the mails, 

employed devices, schemes, or artifices to defraud, and engaged in acts, practices, or courses of 

business which operated or would operate as a fraud or deceit upon other persons. 

149. Ostern, Kane, and Hydrogen knew, or were reckless in not knowing, they were 

engaged in manipulative, deceptive, and fraudulent conduct, because, among other things, 

Ostern’s sales of Hydro and market manipulation—carried out at Kane’s and Hydrogen’s 

direction and with their knowledge and active participation—were intended to create the false 

appearance of robust Hydro trade volume and artificially prop up the token’s price, in order to 

induce market participants to trade in Hydro and ensure that Hydrogen reaped greater profits 

from the sales of its Hydro tokens. 

150. By virtue of the foregoing, Defendants violated, and unless enjoined will continue 

to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rules 10b-5(a) and 10b-

5(c) [17 C.F.R. §§ 240.10b-5(a), (c)] promulgated thereunder. 

THIRD CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)(1) and (3) 

(All Defendants) 
 

151. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

152. By reason of the conduct described above, Defendants, in the offer or sale of 

securities, acting with the requisite degree of scienter, by the use of the means and instruments of 

transportation and communication in interstate commerce or by use of the mails, directly or 

indirectly, Defendants, knowingly or recklessly, employed devices, schemes or artifices to 

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36 

defraud, and knowingly, recklessly, or negligently engaged in a transaction, practice or course of 

business which operated or would operate as a fraud or deceit upon the purchaser of such 

securities. 

153. Ostern, Kane, and Hydrogen knew, were reckless in not knowing, and should 

have known they were engaged in manipulative, deceptive, and fraudulent conduct, because, 

among other things, Ostern’s sales of Hydro and market manipulation—carried out at Kane’s and 

Hydrogen’s direction and with their knowledge and active participation—were intended to create 

the false appearance of robust Hydro trade volume and artificially prop up the token’s price, in 

order to induce market participants to trade in Hydro and ensure that Hydrogen reaped greater 

profits from the sales of its Hydro tokens. 

154. By virtue of the foregoing, Defendants violated, and unless enjoined will again 

violate, Sections 17(a)(1) and 17(a)(3) of the Securities Act [15 U.S.C. §§ 77q(a)(1), (3)]. 

FOURTH CLAIM FOR RELIEF 
Violations of Section 9(a)(2) of the Exchange Act 

(All Defendants) 
 

155. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

156. By reason of the conduct described above, Defendants directly or indirectly, by 

use of the mails or any means or instrumentality of interstate commerce, or of any facility of any 

national securities exchange or any member of a national securities exchange, effected, alone or 

with one or more other persons, a series of transactions in securities, creating actual or apparent 

active trading in such securities and/or raising or depressing the price of such securities, for the 

purpose of inducing the purchase or sale of such securities by others, including but not limited to 

Ostern’s actions, directed by Kane and Hydrogen and with their knowledge and active 

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37 

participation, to engage in market manipulation that affected the volume and prices of such 

securities for the purpose of inducing the purchase or sale of such securities by others. 

157. Hydrogen, Kane, and Ostern acted with the intent to induce trading by others. 

158. By virtue of the foregoing, Defendants violated, and unless enjoined will continue 

to violate, Section 9(a)(2) of the Exchange Act [15 U.S.C. § 78i(a)(2)]. 

FIFTH CLAIM FOR RELIEF 
Violations of Section 20(b) of the Exchange Act 

(Kane and Hydrogen) 
 

159. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

160. By reason of the conduct described above, Kane and Hydrogen, directly or 

indirectly, committed violations of Sections 17(a)(1) and (3) of the Securities Act [15 U.S.C. 

§ 77q(a)(1), (3)] and Sections 9(a)(2) and 10(b) [15 U.S.C. §§ 78i(a)(2) and 78j(b)] and Rules 

10b-5(a) and (c) thereunder [17 C.F.R. § 240.10b-5(a), (c)] through or by means of Ostern, 

including through Ostern’s fraudulent manipulation of the Hydro securities market which he 

carried out at Kane’s and Hydrogen’s direction and with their knowledge and active 

participation. 

161. By virtue of the foregoing, Kane and Hydrogen violated, and unless enjoined will 

continue to violate, Section 20(b) of the Exchange Act [15 U.S.C. § 78t(b)]. 

SIXTH CLAIM FOR RELIEF 
Violations of Section 15(a) of the Exchange Act 

(Ostern) 
 

162. The SEC repeats, realleges, and incorporates by reference paragraphs 1 through 

140, as though fully set forth therein. 

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38 

163. By reason of the conduct described above, Ostern was and acted as an 

unregistered broker or dealer, by making use of the mails or any means or instrumentality of 

interstate commerce to effect transactions in, or to induce or attempt to induce the purchase or 

sale of Hydro.  Specifically, Ostern, who has never been registered with the SEC in any capacity, 

effected trading in crypto asset securities, on Hydrogen’s behalf, through controlled sales of the 

company’s Hydro tokens, to generate profits for Hydrogen, and he received compensation from 

Hydrogen for these services. 

164. By virtue of the foregoing, Ostern violated, and unless enjoined will continue to 

violate, Section 15(a) of the Exchange Act [15 U.S.C. § 78o(a)]. 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court enter Final Judgments: 

I. 

Finding that Defendants violated the statutes and rules set forth in this Complaint as to 

each;  

II. 

Permanently restraining and enjoining Defendants, and all person in active concert or 

participation with them, from violating, directly or indirectly, the statutes and rules set forth in this 

Complaint as to each; 

III. 

Ordering Defendants to disgorge all ill-gotten gains derived from their illegal conduct as 

set forth in this Complaint, including prejudgment interest thereon pursuant to Sections 21(d)(5) 

and 21(d)(7) of the Exchange Act [15 U.S.C. § 78u(d)(5) and (d)(7)]; 

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39 

IV. 

Permanently barring Defendant Kane from serving as an officer or director of any issuer 

that has a class of securities registered pursuant to Section 12 of the Exchange Act [15 U.S.C. 

§ 78l] or that is required to file reports pursuant to Section 15(d) of the Exchange Act [15 U.S.C. 

§ 78o(d)], pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) 

of the Exchange Act [15 U.S.C. § 78u(d)(2)]. 

V. 

Prohibiting Defendants from participating, directly or indirectly, including, but not limited 

to, through any entity controlled by them, in any offering of securities, including crypto asset 

securities, provided, however, that such injunction shall not prevent either Kane or Ostern from 

purchasing or selling securities, including crypto asset securities, for his own personal account, 

pursuant to Section 21(d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(5)]. 

VI. 

Ordering Defendants to pay civil money penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)]; 

VII. 

Granting such other and further relief as this Court determines to be necessary and 

appropriate; and 

VIII. 

Retaining jurisdiction over this action to implement and carry out the terms of all orders 

and decrees that may be entered. 

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40 

JURY TRIAL DEMAND 

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff SEC demands that 

this case be tried to a jury. 

 

Dated: September 28, 2022 Respectfully submitted, 

    U.S. SECURITIES AND EXCHANGE COMMISSION 

    By: /s/ Christopher J. Carney     
Nicholas C. Margida (pro hac vice application to be filed) 
Christopher J. Carney 
U.S. Securities and Exchange Commission 
Division of Enforcement 
100 F Street, N.E. 
Washington, DC 20549-5977 
(202) 551-8504 
[email protected] 
 
Counsel for Plaintiff U.S. Securities and Exchange 
Commission 

   

Of Counsel: 
Paul E. Kim 
Sonia G. Torrico 
Kathleen Hitchins 
  

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