The Securities and Exchange Commission announced bringing charges against film producer Ryan Felton, rapper and actor Clifford Harris, also known as T.I. and three others. Each of the defendants promoted one of Felton’s two unregistered and fraudulent initial coin offerings (ICOs).
The Commission also charged the two companies controlled by Felton that conducted the ICOs, FLiK and CoinSpark. All defendants except for Felton have agreed to settlements to resolve the charges against them.
The US watchdog alleges in its complaint that Felton promised to build a digital streaming platform for FLiK and a digital-asset trading platform for CoinSpark with the funds raised in the ICOs. Instead, Felton misappropriated those funds, according to the complaint.
The SEC also alleges that Felton secretly transferred FLiK tokens to himself. He then sold them into the market, reaping an additional $2.2 million in profits and that he engaged in manipulative trading to inflate the price of SPARK tokens. The SEC claims that Felton used the funds and proceeds to buy a Ferrari, a million-dollar home, diamond jewelry and other luxury goods.
The Commission found that T.I. sold FLiK tokens on his social media accounts. He claimed to be a co-owner of FLiK and encouraging his followers to invest in the platform’s ICO. T.I. also asked a celebrity friend to promote the FLiK ICO on social media and he provided, calling FLiK as T.I.’s “new venture.”
T.I’s social media manager, William Sparks, Jr. allegedly offered and sold FLiK tokens on T.I.’s social media accounts and two other people based in Atlanta, Chance White and Owen Smith, promoted SPARK tokens without disclosing they were promised compensation in return.
Carolyn M. Welshhans, Associate Director in the Division of Enforcement commented:
The federal securities laws provide the same protections to investors in digital asset securities as they do to investors in more traditional forms of securities. As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.
The defendants were charged with violation of registration, antifraud, and anti-manipulation provisions of the federal securities laws. SEC’s complaint seeks injunctive relief, disgorgement of ill-gotten gains, and civil monetary penalties, as well as bar against Felton.
Sparks agreed to the disgorgement and prejudgment interest and together with White and Smith each agreed to pay a penalty of $25,000. They also agreed with a injunction prohibiting them from trading digital asset security for five years.
The court requires T.I. to pay a $75,000 civil monetary penalty and offer or sell digital-asset securities for at least five years.
Felton is also facing criminal charges in a parallel action.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.