SEC Wins Against YouTuber Ian Balina Over Unregistered Crypto Promo

The US Securities and Exchange Commission (SEC) continues to fight crypto-related scams. Notably, the agency has filed several lawsuits against firms and other participants in its quest to regulate the industry.

Recently, the SEC bagged a win in its case against YouTuber Ian Balina in a US court. The judge declared Balina guilty of selling unregistered securities via an ICO promo.

SEC Bags A Partial Win against YouTuber Balina

On May 22, the SEC emerged victorious in the case against YouTuber Balina in Texas Federal Court.The presiding judge, David Alan Ezra, concluded that the defendant was guilty of selling unregistered securities.

Further, the court decision indicated that Balina violated the US securities law, granting the SEC a partial victory. Judge Ezra declared:

The Court has determined, as a matter of law, that US securities laws apply to Balina's actions and that SPRK tokens qualifyas securities."

The court applied the Howey Test to classify SPRK as an investment contract. This means that the investors anticipated profits from other people's efforts through their pooled funds.

Also, Judge Ezra agreed with the SEC regarding its stance on Balina's intentions. He pointed out that the YouTuber targeted US investors in his quest for gains. As a result, the judge ruled out the defendant's summary judgment bid, which highlighted SEC's lack of jurisdiction since the sales took place abroad.

In context, the SEC filed a lawsuit against Balina in September 2020. It alleged that the crypto researcher and YouTuber pioneered unregistered sales of Sparkster (SPRK) coins.

The regulator also alleged that Balina created an investment pool on Telegram in 2018, where he promoted his offering. However, the court's decision didn't favor the SEC in some claims against the YouTuber.

For instance, the agency had alleged that Balina didn't provide a proper compensation agreement he had with Sparkster CEO Sajjad Daya.

Additionally, SEC pointed out that Balina failed to disclose his deals with Sparkster to investors, claiming that the YouTuber received a 30% bonus for the SPRK coins he bought.

But the court slashed it out due to factual inconsistencies. Balina said that the alleged bonus is part of Sparkster's standard volume discount via its private presale deal.

SEC's History With Blockchain Platform Sparkster

Sparkster claims to be a low-code" blockchain application platform with a native token, SPRK. The company completed its initial coin offering (ICO) between April and July 2018.

Through its ICO, the firm attracted over 4,000 investors, generating $30 million in the process. However, the SEC set its trap against Sparkster in 2022 on its sales of unregistered crypto tokens.

The regulator issued a cease-and-desist order against the firm, accusing it and its CEO, Daya, of violating the US Securities Act of 1993.

Following the threats from the SEC, Sparkster agreed to settle with the regulator. It agreed to destroy all remaining SPRK coins and remove them from trading platforms.

The firm also paid $30 million in disgorgement, $4.6 million in interest, and a $500,000 civil penalty.

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