Crypto influencer Ian Balina, who was paid by Sparkster to advertise its ICO, has also been charged.
Sparkster and its CEO Sajjad Daya have agreed to a settlement with the US Securities and Exchange Commission (SEC) regarding charges related to the company’s unregistered 2018 initial coin offering (ICO).
Between April and July 2018, 4,000 investors contributed to the ICO, raising almost $30 million as they were assured that their money would be used to advance Sparkster’s “no-code” software platform for kids and that the value of their tokens would increase in value.
The Cayman Islands-based software company and CEO Daya were issued a cease-and-desist order from the SEC on Monday for the charges filed against them.
The crypto firm later that day agreed to a settlement with the SEC, which will see them pay a collective $35 million into a fund to be distributed to investors harmed by the SPRK ICO.
Sparkster will pay $30 million in disgorgement, along with $4.6 million in prejudgement interest and a $500,000 civil penalty.
Additionally, the company also agreed to destroy the remainder of its tokens, remove them from all trading platforms, and make the SEC’s order public on its website. Daya will also pay a $250,000 civil fine.
The CEO acknowledged the charges and subsequent settlement in a blog post published on Medium on Monday and also agreed to not participate in offerings of crypto asset securities for five years.
Carolyn M. Welshhans, associate director of the SEC’s Division of Enforcement, speaking after the announcement stated that:
“The resolution with Sparkster and Daya allows the SEC to return a significant amount of money to investors and requires additional measures to protect investors, including the disabling of tokens to prevent their future sale.”
The SEC said in a press release:
“Without admitting or denying the SEC’s findings, Sparkster agreed to destroy its remaining tokens, request the removal of its tokens from trading platforms, and publish the SEC’s order on its website and social media channels.”
Crypto influencer Ian Balina, who was paid by Sparkster to advertise its ICO, has also been charged. The SEC claims that Balina failed to disclose to investors that he had received payment to promote the ICO.
Balina is also accused of breaking federal securities laws by selling SPRK tokens that he had acquired before the ICO without first registering the sale.
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