SEC fined rapper T.I. for promoting a fraudulent ICO

[bitcoinst]

Washington D.C., Sept. 11, 2020 —
The Securities and Exchange Commission today announced charges against five Atlanta-based individuals, including film producer Ryan Felton, rapper and actor Clifford Harris, Jr., known as T.I. or Tip, and three others who each promoted one of Felton’s two unregistered and fraudulent initial coin offerings (ICOs).  The SEC also charged FLiK and CoinSpark, the two companies controlled by Felton that conducted the ICOs. Aside from Felton, all of the individuals have agreed to settlements to resolve the charges against them.

The SEC’s complaint alleges that Felton promised to build a digital streaming platform for FLiK, and a digital-asset trading platform for CoinSpark. Instead, Felton allegedly misappropriated the funds raised in the ICOs. 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.  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.

https://www.sec.gov/news/press-release/2020-207


2.2$ million versus 75$ thousand. It seems to me that the fine was given too sparing.

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[Upgrade00]

You should include the source of the report when starting threads - https://www.sec.gov/news/press-release/2020-207

2.2$ million versus 75$ thousand. It seems to me that the fine was given too sparing.

According to the report, everyone got a different penalty, depending on their level of involvement in the situation;
• Ryan Felton was not allowed to pay a settlement. He had a key involvement in the mismanagement of investor's funds and charges have not been dropped against him.
• "Sparks agreed to disgorge his ill-gotten gains plus prejudgment interest, and Sparks, White, and Smith each agreed to pay a penalty of $25,000 and to conduct-based injunctions prohibiting them from participating in the issuance, purchase, offer, or sale of any digital asset security for a period of five years. "
• "The SEC’s order against T.I. requires him to pay a $75,000 civil monetary penalty and not participate in offerings or sales of digital-asset securities for at least five years."

This is another example of why investors should be wary of celebrity shills as well as 'expert' advise. Always do your own research

[kindbtc]

SEC should deal with such things right at the start so that investors do not lose. Best scenario would be if SEC setups a vigilant team that keeps an eye on ICOs on a daily basis and as soon as they see a project against the rules or below the mark or fake they should take action and stop the project immediately. This should be the way of action for SEC and not killing the projects and investors later when eerything is ready.

[noorammak]

The penalty is too low for his manipulation and sale. I have a feeling that celebrities in the financial world are undermining the private crypto market rather than helping it go up.
They have so much experience in making money, when ICOs turn out to be better, they are even greedy.

[bitcoinst]

~snip

Many thanks! Apparently I forgot to insert the source.

You are right, any shilling from any celebrity should be taken with a grain of salt.
People who have little connection with the cryptocurrency world cannot advise anything really worthwhile, which means they pursue their own financial interest.

And as we know, for some, money does not smell.

[masterrex]

Thats good news and I believe those people involve are guilty and they deserved it, too much greed for money corrupts them, In the previous incident like this celebrity involvement in the initial coin offerings or ICO was used to bring more investors in the project, I can compare it to Centra (CTR) project which also promoted by Boxing superstar Floyd Mayweather that also went wrong after SEC finds out it was illegal.

[Gozie51]

This is a good step to the right direction. I believe this was possible because they were known names and easily traceable. Anyway, SEC needs to keep it up as more known people could be behind ICO fraud and manipulation.

[Jating]

I quickly scanned the Legal and it has been discussed already: SEC Charges Film Producer, Rapper, and Others for Participation in 2 Fraudulent, didn't get enough exposure though as members don't frequent that board. So If I'm in your shoes, then better lock this thread as it might become a spam fest, just saying.

[Chukwunonso]

It's nice to know that SEC is actively going after ICO Scammers and ripper. I feel bad for T. I because its possible he's not aware of the developers intension to misappropriate the funds raised from ICO. It would be best, if the Scammer is brought to face the wrought of the law to serve as a deterrent to other scam projects.

[royalfestus]

I dont know if the part was missing in the information or there was nothing at all on refunding the contributors to the ICO. Sometimes I think SEC are too selfish with the purchase of scam, they just slap the scammers with settle fund and forget those that were defrauded.

[microsurfer]

Another example that good/popular person for marketing is not mean that project is good

[Coyster]

Aside from Felton, all of the individuals have agreed to settlements to resolve the charges against them.

If T.I and the other individuals involved want to resolve the charges asap, in hindsight it could pretty much mean they are pleading guilty to this allegations and they have actually tried to defraud investors of this project in collaboration with companies FliK and CoinSpark and not a situation of the project being dead due to some other reasons.

That being said, I'm looking at a scenario were scam projects either impersonate highly placed individuals or actually even work with them in the future (and they even have been doing so), to allure investors, who will cause of that hardly question their legitimacy, which should not be so, no matter the individuals who make up the team, it's a rule of thumb to research about not only them, but every single detail about the project.

[articlecity]

I think SECs role is not clear when it comes to regulating crypto and easily their measures and actions are not enough against the scammers and fraud projects that use crypto as a selling point but have nothing to do with blockchain and decentralization.
So i think US should form a new high level agency to actively point out fake or scam crypto projects and help save investors losing.

[bitcoinst]

I dont know if the part was missing in the information or there was nothing at all on refunding the contributors to the ICO. Sometimes I think SEC are too selfish with the purchase of scam, they just slap the scammers with settle fund and forget those that were defrauded.

One way or another, they operate within the framework of the law. Probably it would look right if the fines were higher, and the scammers were forced to pay damages.
I suppose there were such cases too. However, the current fines surprise me. As a rule, they do not exceed 5% of the total amount of collected money.

[tvplus006]

The penalty is too low for his manipulation and sale. I have a feeling that celebrities in the financial world are undermining the private crypto market rather than helping it go up.
They have so much experience in making money, when ICOs turn out to be better, they are even greedy.

As a result, all the money that he received for advertising scam ICO, TI will have to return as a fine. This shows us all that famous people are not going to understand what they are offered to advertise. For them, the size of the fee they receive for advertising is important. But given that this is not the first penalty for advertising scams ICO, other well-known personalities will be more careful to approach this type of advertising.