Musician T.I. was named in an investigation by the Securities and Exchange Commission on Friday in a fraudulent initial coin offering scheme.
The SEC said T.I. will not be criminally charged, but settled on a $75,000 fine and he has agreed to not participate in offerings or sales of digital-asset securities for at least five years.
Film producer Ryan Felton is facing criminal charges, allegedly 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 initial coin offerings, the SEC said.
Felton is facing charges of violating registration, anti-fraud, and anti-manipulation provisions of the federal securities laws.
T.I. was allegedly involved in promoting Felton’s scheme. The SEC said that T.I., and his social media manager William Sparks, Jr., offered FLiK tokens on T.I.’s social media accounts.
“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,” said Carolyn M. Welshhans, Associate Director in the Division of Enforcement. “As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”
Felton was also accused of manipulative trading to inflate the price of SPARK tokens.
The SEC said that Felton made an addition $2.2 million in profits, and used money he allegedly misappropriated to buy a Ferrari, a million-dollar home, diamond jewelry, and other luxury goods.