According to Thursday’s release, Felton purchased a $1.5 million residence, a $180,000 Ferrari coupe, a new $58,250 Chevy Tahoe, and approximately $30,000 in diamond jewelry, all with cash.
In order to drive up the price for the FLiK coins, Felton announced on social media that T.I. was a co-owner in his company. The star even tweeted about FLiKIO before the company made its initial coin offering in August 2017. Felton also claimed the U.S military had agreed to distribute the FLiKIO streaming platform to service members and told investors he was finalizing licensing deals with major film and TV studios.
In reality, Felton had no contract with the armed forces, he’d never discussed a FLiKIO licensing deal with any studios, and T.I’s only role in the company was authorizing a promotional post on social media.
The FLiK tokens peaked at 35 cents apiece on the cryptocurrency exchange market in October 2017, a federal judge said in a June 2021 ruling to dismiss a class-action lawsuit against T.I. But a “massive dump” caused the tokens to lose value, and by the middle of 2018, they were worth less than a penny.
“The technology has advanced, but the crime remains the same, and those who invest in cryptocurrency must be wary of opportunities that appear too good to be true,” said Atlanta-based FBI special agent Keri Farley, who helped investigate the case.
William Pryor, a U.S. federal appeals judge, dismissed a lawsuit that named Felton and T.I. as defendants because the plaintiff, Kenneth Fedance, filed it in May 2019, well after the one-year statute of limitations had run out. Fedance had purchased $3,000 worth of FLiK tokens in August 2017 and alleged in his complaint that Felton and T.I. “fraudulently concealed the true nature of FLiK (tokens).”
Felton used a slightly different scheme in 2018 when he launched an initial coin offering for a second company, CoinSpark. He promised investors 25% of the profits from the cryptocurrency trading exchange by way of dividends, attorneys said. He also promised that a global accounting firm would audit the company’s books each quarter.
But prosecutors said Felton never even spoke to the accounting firm and he posed as an excited investor on social media, using fake names and fraudulent information to promote CoinSpark.
The company raised more than $200,000 through the initial coin offering. Afterward, Felton announced that none of the investors would receive the 25% dividend he promised. Instead, he offered them a refund, but prosecutors said he began ignoring and rejecting the refund requests. Again, he routed the majority of the funds to his personal bank accounts.
Felton pleaded guilty to 12 counts of wire fraud, 10 counts of money laundering and two counts of securities fraud. U.S. District Court Judge J.P. Boulee will sentence him at a yet-to-be-determined date.
Read More:Atlanta movie maker pleads guilty to $2.5M cryptocurrency scam