The U.S. Securities and Exchange Commission (SEC) has ordered crypto firm Sparkster and its CEO to pay $35 million into a fund to be distributed to harmed investors. The securities regulator also accused crypto influencer Ian Balina of promoting crypto tokens without disclosing the compensation received.
SEC Cease and Desist Order Against Unregistered Crypto Firm
The United States Securities and Exchange Commission (SEC) announced on Monday that it had issued a cease and desist order against Sparkster Ltd. and its CEO, Sajjad Daya, “for the unregistered offering and sale of securities of crypto assets from April 2018 to July 2018.”
The SEC explained that “by offering and selling securities of crypto assets called SPRK tokens” to raise funds to develop Sparkster’s software platform:
Sparkster and Daya have raised $30 million from 4,000 investors in the United States and abroad.
They told investors that SPRK tokens would increase in value, promising to make the tokens available on a crypto trading platform.
In an agreement with the SEC, Sparkster agreed to destroy its remaining crypto tokens, request the removal of its tokens from trading platforms, and post the SEC order on its website and social media channels. Daya has agreed to refrain from participating in securities offerings of crypto assets for five years.
The SEC detailed:
Sparkster and Daya have agreed to collectively settle and pay more than $35 million into a fund to be distributed to aggrieved investors.
Crypto influencer Ian Balina accused by SEC
The securities regulator also announced on Monday that it had “charged crypto influencer Ian Balina for failing to disclose the compensation he received from Sparkster for publicly promoting his tokens and for failing to file a statement. of registration with the SEC for the Sparkster tokens that he resold”.
The SEC explained that Balina purchased $5 million worth of SPRK crypto tokens and promoted it on Youtube, Telegram, and other social media platforms from around May to July 2018. The regulator explained:
Balina reportedly failed to disclose that Sparkster agreed to offer him a 30% bonus on the tokens he purchased, in return for his promotional efforts.
The crypto influencer also allegedly organized an investment pool of at least 50 people to whom he offered and sold the unregistered tokens, the securities watchdog noted.
Balina is accused of violating the bid registration provisions of the securities law, the SEC detailed, adding that it “seeks an injunction, reimbursement plus prejudgment interest and civil penalties.”
Responding to the SEC’s announcement, Balina tweeted, “Glad to make this fight public. This frivolous accusation by the SEC sets a bad precedent for the entire crypto industry. If investing in a private sale with a discount is a crime, the entire crypto VC space is in trouble. They refused the settlement, so they have to prove themselves.
What do you think of the SEC’s action against Sparkster and crypto influencer Ian Balina? Let us know in the comments section below.
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