Cayman Islands-based software company Sparkster and its CEO, Sajjad Daya, have agreed to a settlement with the U.S. Securities and Exchange Commission (SEC) over charges stemming from the company’s unregistered 2018 initial coin offering (ICO).
The ICO raised approximately $30 million from 4,000 investors between April and July 2018. Investors were told the money would go towards helping Sparkster develop its “no-code” software platform for children, and promised that their tokens would increase in value.
Read more: ICO-Funded Project Sparkster Converts $22M in Ether to USDC After 3 Years, No Product
Sparkster and Daya were slapped with a cease-and-desist letter from the SEC on Monday morning and, by Monday afternoon, agreed to pay a collective $35 million into a fund to be distributed to investors harmed by the SPRK ICO.
Sparkster will pay $30 million in disgorgement, $4.6 million in prejudgement interest and a $500,000 civil penalty. The company also agreed to destroy its remaining tokens, remove its tokens from any trading platforms and publish the SEC’s order on its website. Daya will also pay a $250,000 civil penalty.
Daya acknowledged the charges and subsequent settlement in a blog post published to Medium on Monday.
Charges have also been filed against crypto influencer Ian Balina, who was paid by Sparkster to promote its ICO. According to the SEC, Balina did not disclose to investors that he had been paid to market the ICO. Balina also allegedly violated federal securities laws by conducting an unregistered sale of SPRK tokens he purchased prior to the ICO.
Read more: ICO Promoter Ian Balina Charged With Violating Federal Securities Laws
Though Sparkster’s settlement with the SEC was speedy, Balina’s charges could take longer to resolve.
Balina took to Twitter on Monday to decry the “frivolous SEC charge” and express his intentions to “take this fight public … turned down settlement so they have to prove themselves.”