September 12, 2020 | AtoZ Markets – Rapper Clifford Harris Jr., who performs under the name T.I., has settled charges with the United States Securities and Exchange Commission (SEC) related to his promotion of an initial coin offering (ICO).
The US SEC detailed two fraudulent ICOs on Friday. One for a digital streaming service FLiK and another for a trading platform called CoinSpark. Atlanta-based film producer Ryan Felton presumably raised funds.
Felton allegedly misappropriated the funds raised in the ICOs
According to the SEC statement, Felton “allegedly misappropriated the funds raised in the ICOs,” resulting in more than $2 million in losses for investors, per the Department of Justice. “The complaint also alleges that Felton secretly transferred FLiK tokens to himself and 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 US SEC said. “Felton allegedly used the funds he misappropriated and the proceeds of his manipulative trading to buy a Ferrari, a million-dollar home, diamond jewelry, and other luxury goods.”
Rapper T.I. settles with SEC
According to the SEC, rapper T.I. promoted the FLiK on his social media channels during the sale for that token. The SEC also charged three other individuals — William Sparks, Jr., T.I.’s social media manager, and Owen Smith and Chance White. However, all three of them have reached settlements with the SEC.
According to the SEC statement, T.I. will pay a $75,000 civil penalty. The rapper has also agreed “not participate in offerings or sales of digital-asset securities for at least five years. All of the settlements described by the US SEC are subject to the court’s approval. SEC also charged Felton with “violating registration, antifraud, and anti-manipulation provisions of the federal securities laws.
Celebrity endorsements don’t guarantee legitimacy
In the recent past, several celebrities have promoted ICOs that turned out to be fraudulent. A popular case was the CentraTech fiasco that involved former boxer Floyd Mayweather and record producer DJ Khaled.
Following the promotion of the fraudulent CentraTech ICO, both celebrities were asked to pay a total of almost $800,000 involving penalties, disgorgement, and interests. The regulator also banned Khaled and Mayweather from promoting digital securities for two and three years.
Earlier in February, action film star Steven Seagal was fined for touting cryptocurrencies and acting as the brand ambassador for a controversial initial coin offering called Bitcoiin2Gen (B2G).
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