The U.S. SEC has fined Atlanta-based rapper Clifford Harris Jr, better known as T.I, along with other individuals for their involvement in two fraudulent initial coin offering (ICO) projects.
T.I, Others Pay $125K in Penalties
According to a press release by the U.S. Securities and Exchange Commission (SEC) on Friday (September 11, 2020), T.I, along with businessman Ryan Felton and three other individuals based in Atlanta, were involved in a fake pump and dump ICO scheme. The rapper was cleared of all fraud charges back in March 2020.
In 2018, aggrieved investors sued the rapper and Felton after the victims failed to reap the rewards of their investment. The FLiK token created in 2017 started with six cents, with the price hoping to rise to almost $15 under 15 months.
Also, T.I promoted the FLiK tokens across his social media accounts and urged his numerous followers to invest in the token. Furthermore, the Atlanta rapper falsely claimed to be a token holder, while Willam Sparks, T.I’s social media manager, along with Owen Smith and Chance White, promoted the token.
However, the charade became apparent when the FLiK token value plummeted, consequently leading investors to lose money. Although the court dismissed the securities fraud claims along with other charges against the rapper, the SEC publication revealed that T.I will pay a civil penalty of $75,000. Also, T.I will “not participate in offerings or sales of digital-asset securities for at least five years.”
Meanwhile, the charges against Felton include antifraud, registration violation, and manipulation. Felton, who controls FLiK and the crypto platform CoinSpark, reportedly embezzled funds gotten from the ICO and also lived flamboyantly by purchasing a million-dollar home, a Ferrari, and other luxury items.
While Felton faces criminal charges, T.I’s social media manager, along with Smith and Chance, agreed to pay a $25,000 penalty each. The trio will also not participate in any digital securities in any manner for five years.
Celebrity Endorsements Don’t Guarantee Legitimacy
There have been different cases in the past involving celebrities who promoted ICOs that turned out to be pump and dump. A popular case was the CentraTech fiasco that involved former boxer Floyd Mayweather and record producer DJ Khaled.
Following the promotion of the fraudulent CentraTech ICO, both celebrities were asked to pay a total of almost $800,000 involving penalties, disgorgement, and interests. Khaled and Mayweather were banned from promoting digital securities for two and three years, respectively.
Also, in February 2020, the SEC fined Hollywood actor Steven Seagal $350,000 following the violation of the anti-touting law. The actor during the ICO bubble promoted Bitcoiin2Gen’s (B2G) ICO across his social media accounts.
As reported by CryptoPotato in June, the U.S. Supreme court passed a ruling which limited disgorgement sought by the SEC in fraud cases.