US court finds crypto influencer guilty of conducting an unregistered offering of cryptocurrency securities
The U.S. District Court for the Western District of Texas granted partial summary judgment in favor of the Securities and Exchange Commission (SEC) against crypto influencer Ian Balina.
The court determined that Balina had offered and sold SPRK Tokens as securities in unregistered transactions, confirming that US securities laws apply to his activities.
SPRK Tokens Classified as Securities
In a complaint filed on Sept. 19, 2022, the SEC alleged that Balina bought $5 million worth of SPRK tokens from Sparkster, Ltd. in May 2018. He then formed an investment pool with approximately 68 individuals to whom he sold SPRK tokens without registering the offering with the SEC as required by federal securities laws.
The SEC also accused Balina of promoting SPRK tokens on various platforms without disclosing a 30 percent bonus provided by Sparkster as compensation for his promotional efforts.
Balina was charged with violating Sections 5(a), 5(c), and 17(b) of the Securities Act of 1933 for failing to register the offering and not disclosing consideration received for his promotions.
The SEC had requested partial summary judgment on the unregistered offering violation and for a ruling that SPRK Tokens were indeed securities.
In addition to the charges, the SEC issued a cease-and-desist order against Sparkster Ltd. and its CEO, Sajjad Daya. The company paid over $35 million to a fund for affected investors and other penalties.
Promotional Charges Still Pending
The SEC also alleged that Balina promoted SPRK tokens without disclosing the bonus he received, as required by Section 17(b) of the Securities Act.
Balina sought summary judgment on the SEC’s claims, but the court denied his requests, leaving the promotional charges unresolved.
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