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Cryptocurrency has been gaining a lot of attention and investment over the last few years, which has also led to a larger incidence of fraud attempts by people trying to take advantage of this increased attention, and all the money flowing into cryptocurrencies. Recently, in one such high-profile case, film producer Ryan Felton and rapper T.I. were two of five people charged by the U.S. Securities and Exchange Commission (SEC) for fraudulent cryptocurrency transactions. T.I. was also fined $75,000 by the regulator. The SEC’s ruling also bars T.I. from participating in the offer or sale of any digital assets and securities for five years.
The charges brought by the SEC relate to fraudulent initial coin offerings (ICOs). ICOs are the vehicle through which cryptocurrencies are launched, via token sales. The SEC has also brought charges against two of the companies involved, Flik and Coinspark, where Felton was involved. T.I. was involved in the sale and offer of the tokens for Flik, which was described as being ‘Netflix on the blockchain’ – a streaming service which would use Flik tokens as the medium of payment on its service. Users could reportedly buy and sell Flik tokens on exchanges using at least two cryptocurrencies, bitcoin and ethereum. It is alleged that the rapper offered and sold these tokens through his social media profiles between August and September 2017, with the false claim that he was a co-owner of Flik, and he also asked a celebrity friend to promote the venture by making the same claim. According to the SEC, the sale raised 539 ETH (ethereum), which was approximately $164,665 as on September 20, 2017.
This is just one of a growing list of frauds seen in the crypto space. At the same time, we have been seeing an increase in interest in cryptocurrencies by gambling companies. According to reports, cryptocurrencies generated solely for the gambling industry are now worth over $150 million. These currencies are becoming common among crypto traders, and those wishing to find out more about these should visit this site.
Coming back to this case, T.I. has not admitted or denied these charges, while his lawyer stated that the rapper regretted getting involved with Felton, who he believed was a local entrepreneur looking to make it easier for new artists to enter the music industry. He also said that T.I. did not receive any money from these ventures. Nevertheless, it is sure that Felton did defraud people through these schemes. He misappropriated the funds raised through coin sales for Flik and Coinspark, selling them to make over $2 million in profit, which he then used to fund his own personal expenses such as buying a Ferrari, a million-dollar home, jewelry and other lavish purchases.
This example just goes to show how even celebrities can be behind fraudulent scams in the crypto world, such is the allure and the opportunity for theft in this sphere. Investors are therefore warned to be absolutely certain about the products, services and the people backing those ventures before depositing any money in a crypto venture of any sort.