Rapper T.I. Among Five Charged by SEC Over Fraudulent ICO Promotions

The Securities and Exchange Commission (SEC) has charged five Atlanta-based individuals, including rapper and actor Clifford Harris Jr., better known as T.I., for their involvement in promoting unregistered and fraudulent Initial Coin Offerings (ICOs) conducted by film producer Ryan Felton.

The charges also include Felton’s companies, FLiK and CoinSpark, which were allegedly used to deceive investors and misappropriate funds raised through the ICOs.

The Fraudulent ICO Schemes

1. Misleading Promises

• Felton’s ICOs promised investors innovative platforms:
  • FLiK: A digital streaming service.
  • CoinSpark: A digital-asset trading platform.
• Instead of delivering on these promises, Felton allegedly:
  • Misappropriated the funds.
  • Secretly transferred FLiK tokens to himself and sold them for personal profit.
  • Manipulated the price of SPARK tokens to inflate their value.

2. Misuse of Funds

The SEC alleges that Felton used the stolen funds and profits from manipulative trading to purchase:

• A Ferrari.
• A million-dollar home.
• Diamond jewelry and other luxury goods.

Rapper T.I.’s Involvement

According to the SEC:

• T.I. promoted FLiK tokens on his social media accounts, falsely claiming to be a co-owner of the platform.
• He encouraged followers to invest in the FLiK ICO, referring to it as his “new venture.”
• T.I. also enlisted a celebrity friend to promote FLiK and provided the language for the social media posts.

The SEC’s order requires T.I. to:

• Pay a $75,000 civil penalty.
• Refrain from participating in any digital asset security offerings for at least five years.

Other Individuals Charged

William Sparks Jr.

• T.I.’s social media manager, Sparks promoted FLiK tokens on T.I.’s accounts.

Chance White and Owen Smith

• Promoted SPARK tokens without disclosing they were promised compensation for doing so.

Legal Actions and Penalties

SEC Allegations

• Ryan Felton: Charged with violating registration, antifraud, and anti-manipulation provisions of federal securities laws.
• FLiK and CoinSpark: Charged with registration and antifraud violations.
• William Sparks, Chance White, and Owen Smith: Charged with registration and anti-touting violations.

Proposed Settlements

• Sparks, White, and Smith agreed to:
  • Pay $25,000 penalties.
  • Disgorge ill-gotten gains plus interest.
  • Adhere to a five-year ban on participating in digital asset security offerings.
• T.I. agreed to the SEC’s terms, including the $75,000 penalty.

Parallel Criminal Charges

The U.S. Attorney’s Office for the Northern District of Georgia has also brought criminal charges against Ryan Felton.

SEC’s Message to Investors

The SEC emphasized that digital asset investors are entitled to the same protections as traditional securities investors. According to Carolyn M. Welshhans, Associate Director of the SEC’s Division of Enforcement:

“Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”

The case highlights the SEC’s commitment to combating fraudulent activities in the cryptocurrency space, particularly in unregistered digital asset securities offerings.

FAQs About the T.I. and FLiK ICO Case

1. What is T.I.’s role in the FLiK ICO controversy?
T.I. promoted FLiK tokens on social media, claiming to be a co-owner of the project. The SEC found that these claims were misleading.

2. What was promised to FLiK and CoinSpark investors?
Investors were promised a digital streaming platform (FLiK) and a digital asset trading platform (CoinSpark).

3. How did Ryan Felton misuse funds?
Felton allegedly spent the misappropriated funds on luxury items, including a Ferrari and a million-dollar home.

4. What penalties did T.I. face?
T.I. agreed to pay a $75,000 fine and is barred from participating in digital asset security offerings for five years.

5. What is the SEC’s stance on fraudulent ICOs?
The SEC enforces federal securities laws to protect investors from fraud and misrepresentation in both traditional and digital asset markets.

Conclusion

The SEC’s charges against Rapper T.I., Ryan Felton, and others underscore the importance of transparency and accountability in the cryptocurrency industry. As ICOs continue to attract investors, this case serves as a cautionary tale about the risks associated with unregistered offerings and fraudulent activities.

The cryptocurrency space remains a promising frontier, but regulatory vigilance is essential to protect investors and maintain market integrity.

To learn more about the innovative startups shaping the future of the crypto industry, explore our article on latest news, where we delve into the most promising ventures and their potential to disrupt traditional industries.