The worthless token in question is HYDRO of Hydro Protocol, which was supposed to grant holders access to the platform to build apps and businesses on Ethereum blockchain.
HYDRO was a classic pump-and-dump scheme, where the market maker called Moonwalker was manipulating the market by using a “bot” to submit buy & sell orders into the order-books on the exchanges, immediately canceling them, and printing fake volume, all with the goal to create an illusion of market activity and trading in the token.
Apparently, the HYDRO token was listed on 17 different crypto exchanges and the “strategy” of the project was to list on as many low-volume exchanges as possible, with the goal of creating an illusion of trading & demand for the token, before approaching a large & establish crypto exchange with a proposal for listing.
Hydro must pay $2.8 million in fines for the sale of a worthless token, while the market maker was forced to pay $42,000.
Wash trading and pump-and-dumps are part of a bigger problem in the crypto industry, where the project issuing tokens face enormous pressure from the trading community, investors and exchanges to achieve unrealistically high returns and volume numbers.
The project losses since they are conducting questionable & illegal activities that will long term hurt them.
The investors and trading community are at a loss since they cannot trust liquidity, volume or the price of the token.
The exchanges are at a loss since their traders are exposed to tokens that will in the end result in losses.
Very surprisingly, since 2013 till today, the SEC has charged only on two occasions for market manipulation. I expect that number to increase in the coming years as the regulator and crypto industry get a better awareness of the harmful activities done by unethical market makers.