Sparkster Agrees to Pay $35 Million to Harmed Investor Fund

Tuesday, 20/09/2022 | 08:15 GMT by Bilal Jafar
  • The commission has recently issued a cease-and-desist order against the company and its CEO.
  • According to the order, Sparkster and its CEO raised almost $30 million from 4,000 investors.
SEC
SEC

The US Securities and Exchange Commission (SEC) confirmed yesterday that Sparkster and Sajjad Daya, the company’s CEO, have agreed to pay a total of $35 million into a fund for distribution to harmed investors. The commission issued a cease-and-desist order against the company and its Chief Executive Officer for the unregistered selling of crypto tokens between April 2018 and July 2018.

The SEC noted that it has charged Ian Balina, a prominent crypto influencer, for failing to disclose the compensation he received from the company for the promotion of its crypto token. In total, Sparkster and Daya received $30 million from 4,000 investors in the US and abroad by selling SPRK tokens during the mentioned period.

“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,” said Carolyn M. Welshhans, the Associate Director of the SEC’s Division of Enforcement. “The SEC’s action against Balina further protects investors by seeking to hold accountable an alleged crypto asset promoter for failures to follow the federal securities laws.”

The SEC’s Strict Measures

Amid growing interest in emerging assets like cryptocurrencies, the SEC has increased its efforts in the past few years to counter illegal crypto investment schemes.

In an interview with CNBC last year, Gary Gensler, the SEC’s Chairman, called BTC and other digital currencies “speculative assets.”

While providing details of the latest Sparkster case, the commission noted: “The SEC’s order finds that Sparkster and Daya violated the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Sparkster agreed to destroy its remaining tokens. The SEC orders Sparkster to pay $30 million in disgorgement, $4,624,754 in prejudgment interest, and a $500,000 civil penalty. The SEC’s order imposes a $250,000 civil penalty against Daya.”

The US Securities and Exchange Commission (SEC) confirmed yesterday that Sparkster and Sajjad Daya, the company’s CEO, have agreed to pay a total of $35 million into a fund for distribution to harmed investors. The commission issued a cease-and-desist order against the company and its Chief Executive Officer for the unregistered selling of crypto tokens between April 2018 and July 2018.

The SEC noted that it has charged Ian Balina, a prominent crypto influencer, for failing to disclose the compensation he received from the company for the promotion of its crypto token. In total, Sparkster and Daya received $30 million from 4,000 investors in the US and abroad by selling SPRK tokens during the mentioned period.

“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,” said Carolyn M. Welshhans, the Associate Director of the SEC’s Division of Enforcement. “The SEC’s action against Balina further protects investors by seeking to hold accountable an alleged crypto asset promoter for failures to follow the federal securities laws.”

The SEC’s Strict Measures

Amid growing interest in emerging assets like cryptocurrencies, the SEC has increased its efforts in the past few years to counter illegal crypto investment schemes.

In an interview with CNBC last year, Gary Gensler, the SEC’s Chairman, called BTC and other digital currencies “speculative assets.”

While providing details of the latest Sparkster case, the commission noted: “The SEC’s order finds that Sparkster and Daya violated the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, Sparkster agreed to destroy its remaining tokens. The SEC orders Sparkster to pay $30 million in disgorgement, $4,624,754 in prejudgment interest, and a $500,000 civil penalty. The SEC’s order imposes a $250,000 civil penalty against Daya.”

About the Author: Bilal Jafar
Bilal Jafar
  • 2440 Articles
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About the Author: Bilal Jafar
Bilal Jafar holds an MBA in Finance. In a professional career of more than 8 years, Jafar covered the evolution of FX, Cryptocurrencies, and Fintech. He started his career as a financial markets analyst and worked in different positions in the global media sector. Jafar writes about diverse topics within FX, Crypto, and the financial technology market.
  • 2440 Articles
  • 83 Followers

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