ICO scam lands rapper TI, 3 others in hot water with US regulator

American rapper and record producer TI has been ordered to pay $75,000 for his role in an unregistered and fraudulent initial coin offering (ICO). TI was charged alongside actor Ryan Felton and three other individuals in connection with their alleged roles in two token sales—FliK and CoinSpark.

The three-time Grammy award winner offered FLiK tokens on his social media accounts, the U.S. Securities and Exchange Commission stated in its complaint. He falsely claimed to be a part owner of the project and encouraged his followers to invest in the project. He also asked a celebrity friend to promote the FLiK ICO on social media, even providing the language to be used on the posts.

The SEC also charged TI’s social media manager William Sparks Jr. for offering and selling FLiK tokens on TI’s social media accounts. Two other Atlanta residents, Owen Smith and Chance White, were also charged for promoting SPARK tokens without disclosing that they were getting compensated in return.

The watchdog also charged Ryan Felton, an Atlanta-based film producer, as the main operator of the two scams. Felton allegedly misled investors to believe that he would build a digital streaming platform for FLiK and a digital asset trading platform for CoinSpark.

“As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”

The SEC said 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.”

He allegedly used the money raised put purchase a million dollar home, a Ferrari, diamond jewelry and other luxury goods.

The SEC’s order requires TI to pay $75,000 in civil monetary penalty and to refrain from digital asset sales and offerings for at least five years.

For Sparks, Smith and White, the SEC order requires them to disgorge ill-gotten gains and pay a $25,000 penalty. It also prohibits them from participating in “the issuance, purchase, offer, or sale of any digital asset security for a period of five years.”

The SEC order comes months after a U.S. court cleared the rapper of all charges related to the FLiK ICO. As CoinGeek reported, the judge ruled that TI hadn’t violated any securities laws.

Investors in FLiK ICO have also been pursuing Kevin Hart. They claimed that the actor and comedian touted the tokens on his social media accounts, where he has an estimated 50 million followers.

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.