SEC files ICO suit against crypto influencer Ian Balina

The U.S. Securities and Exchange Commission charged crypto investor and YouTuber Ian Balina over his involved in an unregistered initial coin offering (ICO).

The allegations center around the ICO for Sparkster, which was pitched as “no-code” development platform. The ICO, which ended in July 2018, raised $30 million from participants.

Per the court documents:

“This action concerns Ian Balina’s unregistered offering and promotion in 2018 of crypto asset securities called SPRK Tokens. Balina, a self-described crypto asset investor, promoter, and influencer, who claimed he could help people “make millions with initial coin offerings,” failed to disclose the compensation he received from the issuer while he publicly promoted the tokens. He also failed to file a registration statement with the SEC for the tokens that he re-sold using an investing pool that he organized.”

The SEC’s charges centered around his communications around the ICO, focusing both on YouTube as well as activities on Telegram.

As previously reported by The Block, Balina made his name during the 2017-2018 ICO boom and later suffered a personal wallet hack, losing $2.5 million in the process. In June 2019, Balina appeared to issue a mea culpa related to Sparkster in a Twitter thread. The SEC is seeking to permanently bar Balina from participating in securities offerings or promoting them, as well as disgorgement and civil penalties.

Balina did not immediately respond to a request for comment.

Notably the SEC’s filing includes language that argues that because the majority of nodes in the Ethereum blockchain are U.S.-based, the commission views the transactions made in connection to Balina’s investing pool as taking place in the U.S. 

“The U.S.-based investors in Balina’s pool irrevocably committed to the transaction when, from within the United States, they sent their ETH contributions to Balina’s pool. At that point, their ETH contributions were validated by a network of nodes on the Ethereum blockchain, which are clustered more densely in the United States than in any other country,” the filing reads. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.