The U.S. Securities and Exchange Commission (SEC) has ordered crypto company Sparkster and its CEO to pay $35 million into a fund for distribution to injured investors. Securities regulators also charged crypto influencer Ian Barina for promoting crypto tokens without disclosing the compensation received.
SEC cease and desist order against an unregistered crypto company
The U.S. Securities and Exchange Commission (SEC) announced Monday that it has issued a cease and desist order against Sparkster Ltd. and its CEO, Sajjad Daya, for “offering and selling crypto asset securities without registration from April 2018 to July 2018.”
The SEC explained that it raised funds to develop Sparkstar’s software platform “by offering and selling crypto asset securities, known as SPRK tokens.”
Sparkstar and Daya raised $30 million from 4,000 U.S. and international investors.
They told investors that the value of the SPRK tokens would increase and promised to make the tokens available on crypto trading platforms.
In a settlement with the SEC, Sparkster agreed to destroy the remaining crypto tokens, demanded that the tokens be removed from the trading platform, and agreed to publish the SEC’s order on its website and social media channels. Daya agreed to refrain from participating in the crypto asset securities offering for five years.
The SEC detailed.
Sparkster and Daya settled and agreed to pay a total of more than $35 million into a fund to be distributed to affected investors.
Crypto Influencer Ian Balina was charged by the SEC
Securities regulators also charged crypto influencer Ian Balina on Monday for “failing to disclose the compensation he received for publicly promoting Sparkster tokens and failing to file a registration statement with the SEC for the Sparkster tokens he resold.” The announcement states.
The SEC explained that Balina purchased $5 million worth of SPRK crypto tokens and promoted them on Youtube, Telegram, and other social media platforms from around May to July 2018. Regulators elaborated.
Balina allegedly failed to disclose that Sparkster had agreed to offer him a 30% bonus on the tokens he purchased in exchange for his promotional activities.
The crypto influencer also allegedly organized an investment pool of at least 50 individuals to whom he offered and sold unregistered tokens, the securities watchdog noted.
Balina was charged with violating the offering registration provisions of the Securities Act, the SEC detailed, adding that it “seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.”
In response to the SEC’s announcement, Barina tweeted ‘Excited to take this fight public. This frivolous SEC charge sets a bad precedent for the entire crypto industry. If investing in private sales at a discount is a crime, the entire crypto VC space is in trouble.Turned down settlement so they have to prove themselves.”
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