SEC Charges Actor, Rapper T.I. With Shilling Fraud ICO

By Jeff Benson

The US Securities and Exchange Commission (SEC) has charged Clifford Harris, Jr., aka T.I., a rapper and actor, with promoting an unregistered initial coin offering. Four others were also charged, including Ryan Felton, an Atlanta film producer.

According to the SEC, Felton raised money via ICOs for FLiK, a streaming platform, and CoinSpark, a platform for trading digital assets. The SEC alleges that Felton instead transferred FLiK tokens to his own account and sold them in exchange for over $2 million, which he used to "buy a Ferrari, a million-dollar home, diamond jewelry, and other luxury goods."

T.I., star of Hollywood films including Ant-Man and Dolemite Is My Name, was allegedly a hype man for the venture. The SEC says he claimed, falsely, to be a FLiK co-owner as he pushed his fans to invest.

T.I. seemed to have dodged a bullet earlier this year, when a US District judge dismissed him from a class-action lawsuit over the FLiK ICO. Angry investors had accused Felton and T.I. of promoting an unregistered security then dumping the Flik token after it reached the price of $0.21 (it's currently worth next to nothing, and the project website hasn't worked in over a year).

The SEC's net dragged in T.I.'s social media manager, William Sparks, Jr., as well as film industry workers Chance White and Owen Smith, who allegedly promoted CoinSpark without mentioning they had been paid to do so.

The SEC did not, however, charge actor and comedian Kevin Hart, who FLiK investors named in an amended version of the lawsuit, accusing him of being part of the pump scheme. That lawsuit is ongoing.

The SEC complaint, however, does say that, at Felton's behest, T.I. had arranged for "the FLiK ICO to be promoted on the Twitter, Instagram, and Facebook accounts of a well-known American actor, comedian, and producer ('Celebrity 1'), who, at the time of the FLiK ICO, had more than 34 million followers on Twitter."

According to the SEC, "The announcement of the FLiK ICO on Celebrity 1’s social media accounts also substantially amplified the reach of FLiK’s marketing campaign for the FLiK ICO."

Of those charged by the SEC, all except Felton have settled. T.I. will pay a $75,000 penalty and has agreed to stay away from digital asset promotions for five years. Sparks, White, and Smith will pay $25,000 each as a penalty and be barred from digital asset security sales for five years.

Carolyn M. Welshhans, the SEC associate director in the Division of Enforcement, said in a release, “As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”

Felton now faces criminal charges.

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