The US Securities and Exchange Commission (SEC) has loaded crypto influencer Ian Balina, who alleged that the crypto personality did not file a registration statement with the commission for his offering and sale of Sparkster’s SPRK tokens, and no exemption from registration was applicable.
He also allegedly failed to disclose the compensation he received while promoting Sparkster’s SPRK initial coin offering (ICOICO) on social media, according to the SEC.
Sparkster offered investors part of its “no-code” software development platform by purchasing SPRK tokens, which it claimed would allow users to develop software with minimal technical coding skills. A product demo can still be viewed here.
The SEC seeks “injunctive relief, disgorgement, civil penalties and other appropriate and necessary equitable relief.” If the charges are upheld, it will mean that Balina will not be able to market securities again.
The submission also argues that contributions have been made in Ethereum (ETH) to participate in the ICO all took place in the United States.
“[Users’] ETH contributions were validated by a network of nodes on the Ethereum blockchain, which are clustered more closely in the United States than in any other country,” the filing states. “As a result, these transactions took place in the United States.”
The influencer took to Twitter to announce that he was “excited to take this fight in public”.
“This frivolous SEC charge sets a bad precedent for the entire crypto industry,” he added. “If it’s a crime to invest in a private sale at a discount, the whole crypto VC space is in trouble.”
He added that he had “refused to settle” with the commission. The SEC announced today that Sparkster and CEO Sajjad Daya agreed to settle and pay $35 million to affected Sparkster investors.
Associate Director of the SEC’s Division of Enforcement Carolyn M. Welshhans said the settlement “allows the SEC to return a significant amount of money to investors and requires additional measures to protect investors, including disabling tokens to prevent their future sale.”
Actions against Balina “further protect investors by seeking to hold an alleged promoter of cryptoassets accountable for failing to comply with the federal securities laws,” she added.
Balina boasted around 143,000 Twitter followers and 110,000 YouTube subscribers at the time of writing, along with books on Amazon and Audible, and mainstream media appearances in The Wall Street Journal, CNBCand Forbes.
The Ugandan-born entrepreneur left his sales role at IBM to market crypto full-time in 2017, with content such as “How to Make Millions with Initial Coin Offerings (ICOs)” racking up hundreds of thousands of views.
Decrypt has yet to receive comment from Balina at press time.
Balina’s Sparkster ICO campaign
Balina gave the token a 90% “Hall of Fame” rating on his ICO investment spreadsheet and promoted it to users of a private Telegram group of around 50 people, according to SEC’s filing.
The Cayman Islands-incorporated firm is now defunct, with last tweet from their company account that was created in 2021.
The SPRK ICO, which the SEC confirmed was unregistered, took place between April and July 2018, raising approximately $30 million from nearly 4,000 investors located overseas and in the United States.
Balina reportedly signed a contract to invest approximately $5 million in the Sparkster offering before promoting the offered SPRK tokens on YouTube, Telegram and other social media platforms.
Although the SEC claimed he agreed to receive a 30% bonus from Sparkster on the tokens he purchased in the Sparkster offering, Balina allegedly never publicly disclosed the consideration he received for the promotion.
Editor’s note: This article was updated on September 19, 2022 at 6pm EST to include details of Sparkster and its CEO’s $35 million settlement with the SEC.
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