The US SEC charged rapper T.I. (Clifford Harris Jr.), 39, and four other men based in Atlanta with civil charges for their role in the propagation of an unregistered ICO.
Details of the Charges
The SEC defines ICOs as a tool used to raise capital or take part in an investment opportunity. According to the SEC, T.I.’s social media manager William Sparks Jr. as well as T.I. promoted the fraudulent ICO for the FLiK platform. FLiK would have been used to offer a streaming media platform with services and products that could be bought using FLiK tokens. The FLiK platform was the brainchild of Ryan Felton, a renowned film producer.
The SEC states that FLiK was promoted as Netflix on the blockchain. T.I. was accused of offering and selling FLiK tokens on his social media accounts. Besides that, he falsely claimed that he was a co-owner of FLiK and he encouraged his followers to invest in the ICO for the FLiK tokens. Besides that, he asked a celebrity friend to help him promote FLiK online and provided the language for the social media posts, which state that FLiK was T.I.’s “new venture.”
The SEC stated that various actions by T.I. around FLiK violated Sections 5(a) and 5(c) of the Federal Securities Act. He violated these sections when he offered and sold FLiK tokens as securities without proper registration.
The SEC settled with T.I., his social media manager, Sparks Jr., Smith, and White. However, they did not settle with Felton. The rapper was ordered to pay $75,000 for his role in the FLiK token sale. All payments have to be made within 365 days of the order.
Sparks Jr., Smith, and White will also pay $25,000 to the SEC for their role in the token sale, according to the SEC press release. The SEC also imposed a five-year injunction on them preventing them from taking part in the issuance, purchase, sale, or offer of digital asset securities.
The SEC is accusing Felton of misappropriating funds from the FLiK ICO. He is accused of transferring the FLiK tokens to himself secretly and selling them in the market to make an extra $2.2 million. The SEC alleges that Felton used the funds to buy a million-dollar home, a Ferrari, expensive, jewelry, and other luxury items.