On Monday, the Securities and Exchange Commission (SEC) issued a cease-and-desist order against Cayman Islands-based Sparkster Ltd. and its CEO, Sajjad Daya, for the unregistered offer and sale of crypto asset securities. It also charged crypto influencer Ian Balina with failing to disclose compensation he received from promoting tokens in a civil complaint.
The agency asserted that from April through July 2018, Sparkster and Daya raised $30 million from 4,000 investors worldwide by offering and selling crypto asset securities called SPRK tokens to fund further development of Sparkster’s “no-code” software platform. They were touted as value-gaining assets and when offered and sold were neither registered with the SEC nor eligible for a registration exemption, per the agency.
The complaint against Balina alleges that he, a self-described crypto asset investor and influencer, claimed he could help people “make millions with initial coin offerings.” The lawsuit details his rise to prominence in the crypto community as a former Fortune 500 “Sales Evangelist,” his publication of a book about his self-made wealth, and that he has approximately 110,000 Twitter subscribers, and his videos have cumulatively attracted over 2.3 million views on YouTube.
Yet, the SEC dually faults him for failing to disclose the compensation he received from Sparkster while promoting SPRK and failing to file a registration statement with the SEC for the tokens that he re-sold using an investing pool he organized. The SEC seeks injunctive relief, disgorgement plus prejudgment interest, and civil penalties.
For their part, Sparkster and Daya agreed, without admitting or denying fault, to destroy the remaining SPRK tokens, request their removal from trading platforms, and publish the SEC’s order on Sparkster’s website and social media channels. In addition, Sparkster must pay $30 million in disgorgement, $4.6 million in interest, and a $500,000 civil penalty, while Daya must pay a $250,000 civil penalty.