CoinSpark is a decentralized digital asset trading platform, supporting major currencies like Bitcoin, Ethereum, Ripple etc. In 2018, Ryan Felton announced ICO for his company, CoinSpark, which was a cryptocurrency trading exchange. However, it lead to a scam.
What went wrong with Coinspark?
In order to attract investors to the ICO, Felton promised that Spark coin investors would receive 25% of the trading exchange’s profits in the form of dividends. Felton further claimed that a global accounting firm would audit CoinSpark’s finances on a quarterly basis, but, in reality, he never spoke with the accounting firm.
SEC Files Complaint
The SEC’s complaint, which was filed on September 10, 2020, in federal district court in Atlanta, Georgia, alleged that Felton had made promises to develop a digital streaming platform for FLiK and a digital asset trading platform for CoinSpark. However, instead of fulfilling these promises, Felton was accused of misappropriating the funds raised through the ICOs. Furthermore, the complaint stated that Felton secretly transferred FLiK tokens to himself and sold them on the market, generating an additional $2.2 million in profits. Additionally, it was alleged that Felton engaged in manipulative trading practices to artificially inflate the price of SPARK tokens. These ill-gotten gains were purportedly used by Felton to purchase luxury items such as a Ferrari, a million-dollar home, diamond jewellery, and other extravagances.
SEC Obtains Judgement
On March 28, 2024, the Securities and Exchange Commission (SEC) achieved a significant legal victory as it obtained a final judgment against defendants Ryan Felton, FLiK, and CoinSpark. This judgment comes after the SEC had previously filed charges against them for their involvement in two fraudulent initial coin offerings (ICOs).
As part of the final judgment, Felton, FLiK, and CoinSpark have consented to various injunctions and penalties. This includes being permanently enjoined from violating specific sections of the Securities Act of 1933 and the Securities Exchange Act of 1934, as well as being barred from participating in any digital asset security-related activities. Felton is also permanently barred from acting as an officer or director of a public company. Additionally, the defendants have been ordered to pay joint and several disgorgements of $2.8 million, along with prejudgment interest totalling $704,981. These amounts will be deemed satisfied by the criminal judgment and restitution and forfeiture orders entered against Felton by the United States District Court in United States v. Felton, Case No. 20-CR-347 (N.D. Ga.).
