Sparkster CEO Agreed to Pay $35M to Harmed Investors in SEC Crackdown

The United States Security and Exchange Commission (SEC) has issued a cessation order against cryptocurrency firm Sparkster and, the firm’s CEO Sajjad Daya, for the unregistered offering and sale of securities linked to crypto assets from April 2018 through July 2018. 

According to the SEC’s ruling, Sparkster and Daya raised $30 million from 4,000 investors in the US and abroad by marketing and selling crypto asset securities known as SPRK tokens to finance the expansion of Sparkster’s “no-code” software platform. 

Consequently, the firm and its CEO have reached an agreement with the SEC to pay a settlement of $35 million to the harmed investors. In addition, the funds generated will be given to the investors as a viable means to compensate them. 

Carolyn Welshhans, the associate director of SEC’s Division of Enforcement noted that “The resolution with Sparkster and Daya allows the SEC to return a significant amount of money to investors and requires additional measures to protect investors, including the disabling of tokens to prevent their future sale.”

According to a press release, the SEC added that “Without admitting or denying the SEC’s findings, Sparkster agreed to destroy its remaining tokens, request the removal of its tokens from trading platforms, and publish the SEC’s order on its website and social media channels.”

The US SEC Presses Charges Against Crypto Investor Ian Balina

SEC has also pressed charges against IBM data analytics expert and famous YouTuber Ian Balina for his participation in this case. 

The SEC claimed that Ballina advertised SPRK on social media without disclosing his intention to receive a 30% bonus on the $5 million worth of tokens he purchased. Meanwhile, Balina says that he is in opposition with the penalties given by the SEC.

Likewise, Daya concurred to withdraw for five years from taking part in securities offerings involving cryptographic assets. Notably, the firm and its CEO violated the registration provisions of the Securities Act of 1933.

The SEC has been more vibrant as regards crypto enforcement actions in recent times. Some of its high-profile cases include insider trading from Coinbase Global and NFT platform, OpenSea.