T.I. Charged by SEC for Role in Fraudulent Cryptocurrency Scheme
The Securities and Exchange Commission announced Friday it has charged T.I. for the rapper’s role in a fraudulent cryptocurrency scheme.
The SEC implicated five Atlanta-area people — including Clifford “T.I.” Harris — for promoting FLiK and CoinSpark, “two unregistered and fraudulent initial coin offerings (ICOs)” led by film producer Ryan Felton, in the summer of 2017.
In the complaint against Harris, the SEC claims “T.I. offered and sold FLiK tokens on his social media accounts, falsely claiming to be a FLiK co-owner and encouraging his followers to invest in the FLiK ICO. T.I. also asked a celebrity friend to promote the FLiK ICO on social media and provided the language for posts, referring to FLiK as T.I.’s ‘new venture.'” Harris’ social media manager William Sparks was also charged by the SEC.
By posting about FLiK on his social media accounts, Harris “substantially amplified the reach of FLiK’s marketing campaign.” However, with the money raised from the phony cryptocurrency companies, Felton “used the funds he misappropriated and the proceeds of his manipulative trading to buy a Ferrari, a million-dollar home, diamond jewelry, and other luxury goods.”
A spokesperson for T.I. said in a statement, “Mr. Harris regrets his involvement with Mr. Felton. He attempted to help a local entrepreneur who presented an innovative idea for a streaming online platform that would help reduce the barriers of entry for creators of music and video content. Regrettably, Mr. Felton apparently never built the platform he promised T.I. and many others, and instead sought to profit from Mr. Harris’s popularity and reputation. Mr. Harris never took a dollar from Mr. Felton’s failed venture and immediately removed his name from it once he learned that the project was undeveloped. Mr. Harris responded to all inquiries made by the SEC, and the settlement announced today is in full satisfaction of that investigation. Mr. Harris will continue to look for ways to help new artists gain access to digital distribution.”
Following a prearranged settlement with the SEC, Harris will avoid criminal charges; instead, he’s been ordered to pay a $75,000 civil money penalty as well as refrain from partaking in the cryptocurrency market for five years.
“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,” Carolyn M. Welshhans, Associate Director in the Division of Enforcement, said in a statement. “As alleged in the SEC’s complaint, Felton victimized investors through material misrepresentations, misappropriation of their funds, and manipulative trading.”