The SEC charged five individuals, including movie producer Ryan Felton and rapper Clifford Harris Jr. for their involvement in two of Mr. Felton's unregistered initial coin offerings ("ICOs").
In a Consent Order, the SEC stated that Mr. Harris inaccurately referred to himself as a co-owner of one of Mr. Felton's companies and encouraged investors to take part in that company's ICO. As a result of his conduct, the SEC determined, Mr. Harris violated Sections 5(a) and 5(c) of the Securities Act for offering and selling securities without an effective registration statement or an exemption from registration. To settle the charges, Mr. Harris agreed to (i) cease and desist from further violations, (ii) comply with the undertakings outlined in the Consent Order and (iii) a $75,000 penalty.
In a related Complaint filed in the United States District Court, Northern District of Georgia, the SEC alleged that Mr. Felton misappropriated funds from two unregistered offerings of digital asset securities, and used the funds to purchase a Ferrari, a home, jewelry and other luxury goods. The SEC argued that Mr. Felton misrepresented in promotional materials for both of his companies' ICOs the (i) capabilities of each company's platform and (ii) "inevitable" appreciation of the coins.
Commentary
The official video of "Whatever You Like" from Clifford Harris Jr., better known in financial regulatory circles as "T.I."
Primary Sources
- SEC Press Release: SEC Charges Film Producer, Rapper and Others for Participation in Two Fraudulent ICOs
- SEC Complaint: FLiK, CoinSpark, Ryan S. Felton, William Q. Sparks, Jr., Owen B. Smith and Chance B. White, Defendants, and Hyperion Holdings LLC, Stephanie L. Brown, Dale W. Felton and Jennifer Felton, Relief Defendants
- SEC Order: Clifford Harris, Jr.
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