SEC Charges Crypto Influencer for Not Disclosing Incentive to Promote Unregistered ICO

The United States Securities Exchange Commission (SEC) has filed a lawsuit against prominent crypto influencer, investor, and entrepreneur Ian Ballina over an initial coin offering (ICO) dating back to 2018.

The SEC accused Ballina purchased $5 million worth of SPRK tokens from Sparkster Ltd. and received 30% bonus tokens before he started promoting it on social media. He did not disclose that he was given an incentive to promote the ICO, the regulator has charged in its lawsuit in federal court in Austin, Texas, media reports said. 

SEC’s Case Against Sparkster   

Sparkster and its CEO Sajjad Daya hogged the media headlines in 2018 and 2019 for never launching the SPRK tokens for which they had already raised $30 million in ETH. In an interesting development, one of the Sparkster wallets from 2018 got activated for the first time in May 2022, and 14,200 ETH tokens were swapped for $22.7 million USDC.      

According to the SEC statement on Monday, Sparkster Ltd. raised $30 million from about 4,000 investors in an unregistered ICO between April and July 2018. The company and its CEO Sajjad Daya have agreed to pay $35 million in a settlement to resolve investors’ claims of losses due to the unregistered SPRK offering, it added.

The SEC has been apparently on a trail of unregistered ICOs cheating investors during the ICO boom of 2017 and 2018. It has filed lawsuits in several such cases.

In February, the agency charged three individuals for allegedly defrauding over $11 million through an ICO in 2018. Famous American actor and martial artist specialist Steven Seagal was one of the promoters of this project. 

Last year, the Commission went after three Rivetz Group companies and Rivetz Corp CEO Steven K. Sprague for conducting an unregistered ICO that raised $18 million. The SEC complaint said the defendants offered and sold digital assets called RvT tokens to the public, including investors from the US, between July and September 2017.

Ian Balina’s Role in Failed ICO 

The 33-year-old Ian Ballina describes himself as a “World Renown Investor, Entrepreneur, Speaker, and Author” on his website and claims to have a master’s degree in computer science. He has also worked with IBM Watson as a data scientist. Ballina is the founder and CEO of Token Metrics, “a data analytics platform for crypto that helps investors leverage machine learning to become smarter investors.”

In 2017, Ballina used Token Metrics analytics for crypto investments that saw his $20,000 fund swell into a $5-million portfolio of crypto assets, he informs on his site. 

His website is also carrying his Response to the SEC, where he refutes charges as “baseless.” He calls his investment in SPRK “a private pre-sale purchase” and a 30% bonus as a “volume-based discount from the public sale price.” 

Ballina Defends  

Ballina defends himself from the SEC charges in his submission to the court, where he describes the allegations made by the regulator as “unfounded effort based upon multiple misconceptions of fact and law….” Excerpts of the submission are available on Ballina’s website. He also posted his defense arguments through his Twitter handle.

“We are prepared to fight these frivolous charges to the US Supreme Court,” his legal team says on Ballina’s website.

He denies the accusations that he invested $1.2 million in SPRK and indicated that he invested only $106,915.50, and like other investors in the scheme, he, too, was a victim of fraud.