The United States District Court for the Western District of Texas has granted partial summary judgment in favor of the Securities and Exchange Commission (SEC) against cryptocurrency influencer Ian Balina.
The court ruled that Balina offered and sold SPRK tokens as securities in unregistered transactions, and confirmed that his activities are subject to U.S. securities laws.
SPRK is considered a security
According to the SEC's complaint filed on September 19, 2022, Barina purchased $5 million worth of SPRK tokens from Sparkstar in May 2018. Barina then allegedly organized an investment pool of approximately 68 individuals and offered and sold SPRK tokens to them without registering them with the SEC as required by the federal securities laws.
The SEC also alleged that Barina promoted the SPRK token on YouTube, Telegram and other social media platforms between May and July 2018 but failed to disclose a 30% bonus offered to him by Sparkstar as compensation for his promotional efforts.
The SEC charged Balina with violating the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, as amended, and with failing to disclose compensation he received in connection with promotional activities, in violation of Section 17(b) of the Securities Act.
The regulator sought partial summary judgment for the unregistered offering violations and requested a ruling that the SPRK tokens were offered and sold as securities.
In addition to its charges, the SEC: It was issued It issued a cease and desist order against Sparkster and its CEO, Sajjad Daya, and the company has contributed more than $35 million to a fund for affected investors and paid various other fees and penalties.
Promotional rates remain the same
The SEC further alleged that Barina promoted the SPRK token on YouTube, Telegram and social media between May and July 2018. Barina allegedly failed to disclose that Sparkstar offered him a 30% bonus on token purchases in exchange for his promotion.
Promotional fees are subject to Section 17(b) of the Securities Act.
Barina moved for summary judgment on both of the SEC's claims. The court denied Barina's motion, did not decide as a matter of law on the Section 17(b) claims, and allowed the promotional expenses claims to continue.
