Rapper T.I. has been charged with promoting fraudulent cryptocurrency by the Securities and Exchange Commission after promoting FLiK. T.I. has agreed to pay a $75,000 fine, and will not be able to participate in sales and offers of digital-asset securities for the next five years.
Film producer Ryan Felton and three others have also been charged alongside T.I., with Felton being charged for running two fraudulent companies, including FLiK and CoinSpark. T.I. and the other three defendants have agreed to settle, while Felton has not.
T.I. had been accused by the SEC of allegedly offering and selling FLiK “tokens” on social media, and allegedly claiming to have been a co-owner of the company. T.I. had also been accused of inviting celebrity friends to help promote the venture, while two Atlanta residents promoted the tokens without disclosing that they had been allegedly promised compensation for doing so. T.I.’s social media manager had also promoted the company on T.I.’s accounts, with the SEC alleging he had offered and sold tokens through T.I.’s social media.
“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,” Carolyn M. Welshanns, the Associate Director in the Division of Enforcement, said in a press statement. “As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”
Felton had been charged for violating registration, antifraud and anti-manipulation provisions of the federal securities laws. Both of his companies, FLiK and CoinSpark, have been charged with violating registration and anti-fraud provisions.
Felton had also allegedly misappropriated the funds raised from FLiK and CoinSpark, which included secretly transferring tokens to himself to raise an additional $2.2 million and spending the misappropriated funds on a Ferrari, diamond jewelry, a million dollar home and several other luxury goods.