US Rapper T.I. Sued For $5 Million USD After Failure Of His Token
Everybody wanted to cash in during the Bitcoin mania of 2017. The U. S. rapper T.I., also known as T.I.P., was one of these people. During the ICO craze he launched his token, the prices of the token plummeted and now he is being sued for $5 million USD.
According to court documents originally obtained by The Blast, a celebrity site from the U. S., a group of 25 people claim to have invested as much as $1.3 million USD in the FLiK tokens sold by the rapper, which were described as “now worthless securities”.
The token, promoted by the rapper and Ryan Felton, his business partner, was actively endorsed on social media by celebrities and created the impression of a valuable and liquid investment, the document affirms.
While the story is pretty common so far, the allegations are that the duo inflated the price of the token up for sale and then later disappeared when the prices fell. Felton, according to the lawsuit, even created another company and told investors that he had no connection with FLiK. After the trouble, the plaintiffs now want $5 million USD paid in damages for these investors.
The token was originally announced in September 2017, during the high point of the crypto mania and was actively supported by the U. S. actor Kevin Hart. TMZ reported that the campaign has also mentioned Mark Cuban (billionaire and owner of the NBA’s Dallas Mavericks) as a supporter.
FLiK’s peak price was reached on October 17, 2017, when the token was valued at 21 cents. However, now it is traded at almost nothing, as it is worth only $0.001 USD a piece. There are some allegations that the price was artificially pumped to actually reach the value of 21 cents, so this is also a pump and dump scheme, which could also be bad for the creators of the token.
Other Cases With Celebrities And Crypto
The case of this rapper is from the only crypto initiative that failed to produce some actual result. Many celebrities were involved in crypto investments last year.
A very high profile case was the one from the U. S. rapper Ghostface Killah, a member of the Wu Tang Clan, which made an Initial Coin Offering that hoped to raise a total of $30 million USD. However, Ghostface Killah’s plans were thwarted when Cream Capital suspended the sale sometime after the announcement.
Floyd Mayweather, a famous boxer, has also engaged in an ICO, Centra, which was flagged as a fraud by the United States Securities and Commission Exchange (SEC) later.
The Securities Laws
If you are not sure why these famous people are being sued over something other people bought from then, you have to understand how securities work in the United States. As a way to protect investors from scammers, the securities law affirms that the company offering the securities is responsible for it.
This way, if you do like Ryan Felton, sell a token by 6 cents and promises that it will be worth $15 USD in 15 months (a 25,000% increase) but the asset actually roses to 21 cents in some time while the crypto hype is still big and it then loses 99% of its price, you lied to the investors and you may be legally charged for it.
During the ICO craze, not a lot of people were very troubled by making far-fetched promises as the market was unregulated, but most of these people ended up being taken to court as they basically broke the law and it does not matter how they called the securities that they sold.