Rapper T.I. Hit By SEC After Promoting Phony Crypto
Rapper T.I. is being hit with felony charges from the Securities and Exchange Commission (SEC). He has been ordered to pay a penalty fee of $75,000 for his role in a scam-laden initial coin offering (ICO).
The SEC Goes After T.I.
The SEC has made it clear over the past few years that it’s not going to play around. If you try to cheat investors, if you fail to register as a security, if you step out of line in any way, the agency will come after you and it will penalize you. It seems that the rapper is now learning this lesson the hard way. The 39-year-old performer – who’s real name is Clifford Joseph Harris – is alleged to have sold cryptocurrency tokens through his Twitter account three years ago in 2017.
These tokens were part of an elaborate scheme to try and get users involved in what’s been dubbed the 2017 FLiK ICO. T.I. claimed to be a co-owner of the currency, though in truth, he held no stakes in it whatsoever and could not legally claim any ownership.
The SEC alleges that T.I. purposely lied to investors and was in league with filmmaker Ryan Felton, who was reportedly the real brains behind the scam. Felton claimed that he would build “Netflix on the blockchain” but ultimately failed to deliver on any of the promises he made to his investors. Instead, he used the money that was garnered through the ICO to push the price of SPARK, a second crypto token that Felton also had control of.
In addition, he also used investors’ money to purchase several luxury goods for himself, including a new home, diamond jewelry and a Ferrari.
In a statement, the SEC explained:
FLiK’s promotional materials further promised that FLiK tokens would be redeemable on the FLiK platform for increasing amounts over the first year, with each FLiK redeemable for $3.99 after the first three months, $9.99 after 12 months, and $14.99 after 15 months. No FLiK platform every existed.
The statement also delves into the rapper’s alleged role in the scam, which involved promoting it on social media getting unsuspecting investors involved. The SEC states:
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.’
Don’t Mess Around with Fake Cryptocurrencies
It is estimated by the SEC that the ICO garnered as much as 539 ether units – worth approximately $164,665 three years ago – during the month of September 2017 alone.
Rather than face the charges or attend court hearings, T.I. is not admitting to any wrongdoing but has agreed to settle the charges with the SEC. Hence, he is paying the set fee of roughly $75,000. In addition, he will not be permitted to take part in any digital currency offerings over the next five years.