SEC v. FLiK; CoinSpark; Ryan S. Felton; William Q. Sparks; Owen B. Smith; and Chance B. White, No. 1:20-cv-03739, Northern District of Georgia (Mar. 29, 2024) — Complaint

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF  GEORGIA
ATLANTA DIVISION

COMPLAINT
Plaintiff Securities and Exchange Commission (the “Commission”), for its
Complaint against  Defendants FLiK, CoinSpark, Ryan S. Felton (“Felton”),
William Q. Sparks (“Sparks”), Owen B. Smith (“Smith”), Chance B. White
SECURITIES AND EXCHANGE COMMISSION,
Plaintiff,
                                 v.
FLIK,
COINSPARK,
RYAN S.    FELTON,
WILLIAM Q. SPARKS, JR.,
OWEN B. SMITH, and
CHANCE B. WHITE,
Defendants,
And
Case No.

JURY TRIAL DEMANDED
HYPERION HOLDINGS LLC,
STEPHANIE L. BROWN,
DALE W.  FELTON, and
JENNIFER FELTON,
                                              Relief Defendants.

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(“White”) (collectively,  “Defendants”), and Relief Defendants Hyperion Holdings,
LLC (“Hyperion Holdings”), Stephanie L. Brown (“Brown”), Dale W. Felton
(“Dale Felton”), and Jennifer Felton  (collectively, “Relief Defendants”), alleges as
follows:
SUMMARY

1. Between August  2017 and June 2018, Defendants FLiK, CoinSpark
and Felton engaged in fraudulent and unregistered offerings of digital asset
securities, collectively reaping  over $3 million  in illegal profits from investors.
Shortly after each entity’s offering concluded, Felton misappropriated the funds
raised in that offering and then moved on to his next venture.   Despite promising  to
use the funds raised from investors to build the FLiK and CoinSpark online
platforms, Felton instead used the funds to buy a Ferrari,  a  million-dollar  home,
diamond jewelry, and other luxury  items for himself.  None of the proceeds were
used for any of the purposes described in  the offering  materials.
2. From approximately August 20, 2017 to September 20, 2017, Felton
and FLiK, a purported video streaming  platform promoted by Felton as “Netflix on
the blockchain,” conducted a so-called “Initial Coin Offering” (“ICO”), through
which they raised approximately 539 ether (“ETH”), a digital  asset worth
approximately $164,665 as of September 20, 2017, in exchange for FLiK “tokens,”

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which were digital  assets offered as investment contracts, and therefore securities
(the “FLiK ICO”).  Defendant Sparks worked with Felton on the FLiK ICO and,
with Felton and others, directly or indirectly offered and sold  FLiK tokens through
the FLiK ICO.
3. On August 17, 2017, prior to the start of the FLiK ICO, Felton
transferred 60 million  FLiK tokens to an ethereum blockchain address that he
controlled.   Over the next  two months, Felton fraudulently promoted FLiK,
including  by publishing materially false and misleading statements on various
social media platforms and on the FLiK website.  During this same time period,
Felton offered and sold FLiK tokens to investors located all  over the world and in
the United States through his  account at a digital  asset trading  platform.   (These
offers and sales, as well as offers and sales during the FLiK ICO and Felton’s
subsequent offers and sales of FLiK  tokens through June 2018, are referred to
herein collectively  as the “FLiK Offering.”)  Felton made these sales anonymously
and transferred the proceeds to financial accounts in his own name or under his
control.   Felton also diverted the proceeds of the FLiK ICO to his own personal
accounts.
4. In addition to using the proceeds to purchase a house, cars, jewelry,
and high-end home furnishings. Felton also  transferred portions of the proceeds to

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the Relief Defendants, Jennifer Felton (his  wife), Brown (his  sister), and Dale
Felton (his father).
5. In October 2017, Felton began working with White and Smith on a
second offering, this time for a   purported digital  asset exchange called
“CoinSpark.”
6. From February 14 through March 14, 2018, Felton and CoinSpark
raised approximately  460 ETH (worth approximately $282,418 as of March 14,
2018) in  an unregistered offering  of digital  assets called  “SPARK tokens”
(“CoinSpark ICO” or “CoinSpark Offering”), which were offered and sold as
investment contracts, and therefore securities.   Defendants White and Smith
worked on the CoinSpark ICO and, with Felton and others, directly or indirectly
offered and sold SPARK tokens in the CoinSpark ICO.
7. White and Smith promoted the SPARK ICO under false names,
without disclosing  that Felton had promised them full-time  employment  in
connection with CoinSpark, if CoinSpark raised sufficient funds.
8. On March 20, 2018, Felton transferred the ETH raised in  the
CoinSpark ICO to an ethereum blockchain address that he controlled.   Felton
subsequently transferred the ETH to other blockchain  addresses he controlled, and
converted the ETH to other digital  assets and U.S. dollars, before transferring the

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funds to financial  accounts in his own name or under his  control, including
accounts of Relief  Defendants Jennifer Felton and Hyperion Holdings.  Felton also
transferred all  unsold SPARK tokens to a blockchain address under his  control his
own personal account, for his  personal use.
9. In early April  2018, Felton engaged in manipulative matched trades
intended to create the false appearance of trading activity in SP ARK tokens in
order to artificially  increase the trading price of SP ARK tokens and to induce
others to purchase SP ARK tokens.
10. In offering  and selling FLiK and SP ARK tokens, Felton, FLiK, and
CoinSpark knowingly, recklessly, or negligently made and disseminated numerous
materially false  and misleading  statements and engaged in  other deceptive acts,
including manipulative trading by Felton.
11. The FLiK and CoinSpark Offerings were illegal  offerings of securities
for which no registration statements were filed or in effect, and as to which no
exemption from registration was available.
VIOLATIONS
12. By virtue of the foregoing conduct and as alleged  further herein,
a. Defendants Felton, FLiK, and CoinSpark violated Section 5(a)
and 5(c) of the Securities Act, and Section 17(a) of the Securities Act of

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1933 (“Securities Act”)  [15 U.S.C. §§   77(e)(a), 77(e)(c), 77q(a)], and
Section 10(b) of the Securities Exchange Act of 1934 ( “Exchange Act”) [15
U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
b. Defendant Felton aided  and abetted FLiK’s and CoinSpark’s
violations of Section 5(a) and 5(c) of the Securities Act, Section 17(a) of the
Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5
thereunder.
c. Defendants Sparks, White and Smith violated Sections 5(a) and
5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].
d. Defendant Felton violated Section 9(a)(1) of the Exchange Act
[15 U.S.C. §78i(a)].
e. Defendants White and Smith violated Section 17(b) of the
Securities Act [15 U.S.C. § 77q(b)].
f. Relief Defendants Hyperion Holdings,  Brown, Dale Felton, and
Jennifer Felton received funds from Defendant Felton for which they gave
no consideration and to which they have no right  or legitimate  claim.
g. Defendants, unless restrained and enjoined by this  Court, will
continue to engage  in  the acts, practices, transactions, and courses of

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business alleged  in this Complaint or in  acts, practices, transactions, and
courses of business of similar  type and object.
NATURE OF THE PROCEEDING AND RELIEF SOUGHT
13. The Commission brings  this action pursuant to the authority conferred
upon it  by Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Sections
21(d)(1) & (d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(1) & (d)(5)].
14. The Commission seeks a final  judgment:  (a) permanently enjoining
Defendants from engaging  in  acts, practices and courses of business alleged  herein;
(b) ordering Felton, FLiK, and CoinSpark, joint and severally, and Sparks
separately, to disgorge their ill-gotten  gains  and  to  pay prejudgment interest
thereon; (c) prohibiting Felton, pursuant to Section 20(e) of the Securities Act [15
U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)],
from acting  as an officer or director of any public company; (d) imposing  civil
money penalties  on Defendants pursuant to Section 20(d) of the Securities Act [15
U.S.C § 77t(d)] and Section 21(d)(3) of the Exchange  Act [15 U.S.C. § 78u(d)(3)];
(e) ordering Relief  Defendants jointly and severally  with Felton, FLiK, and
CoinSpark to disgorge or return their ill-gotten  gains and to pay prejudgment
interest thereon; (f) prohibiting  Defendants from participating, directly or

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indirectly, in any issuance, purchase, offer, or sale of digital asset securities; and
(g) ordering any other and further relief the Court may deem just and proper.
JURISDICTION AND VENUE
15. This Court has jurisdiction  over this  action pursuant to Sections 20(b),
20(d), and 22(a) of the Securities  Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and
Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e),
and 78aa].   Defendants, directly or indirectly,  have made use of the means or
instruments of transportation or communication in, and the means or
instrumentalities  of, interstate commerce, or of the mails,  in  connection with the
transactions, acts, practices, and courses of business alleged  herein.
16. Venue is proper because the transactions, acts, practices, and courses
of business constituting violations of federal securities laws occurred in the
Northern District of Georgia.  Defendants Felton, Sparks, Smith, and White all
reside in the District, and resided in this District at the time of the events alleged
herein, and Defendants FLiK and CoinSpark have their principal  place of business
in this District.  Relief Defendants Brown and Jennifer Felton reside in this
District, and Relief Defendant Dale Felton traveled to the District during the time
of the events alleged  herein.   Relief  Defendant Hyperion Holdings  has its  principal
place of business in this District.

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DEFENDANTS
17. Ryan S. Felton, age 46, resides in    Atlanta, Georgia.  Felton is the
founder, sole owner, and sole officer of FLiK, CoinSpark, and Hyperion Holdings,
which all  have their primary place of business in Atlanta, Georgia.
18. FLiK is an unincorporated entity that had its principal place of
business in Atlanta, Georgia in 2017-2018.
19. CoinSpark is an unincorporated entity that had its principal place of
business in Atlanta, Georgia in 2017-2018.
20. William Q. Sparks, Jr., 35, is the social media manager for rapper,
actor, and producer Clifford Joseph Harris, Jr. (“Harris”) and resides in  Atlanta,
Georgia.
21. Chance B. White, 41, works in  the film  and film-editing  industry and
resides in Atlanta, Georgia.
22. Owen B. Smith, 40, works in the film  and film-editing  industry and
resides in Atlanta, Georgia.
RELIEF  DEFENDANTS
23. Jennifer Felton, 46, is the wife of Felton and lives  in Atlanta,
Georgia.  Jennifer Felton received approximately $32,000 in jewelry purchased
using the proceeds of the FLiK Offering, and approximately  $25,000 in checks and

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transfers and $11,400 in  prepaid Bitcoin debit cards using the proceeds of the
CoinSpark Offering.  Jennifer Felton also  received, jointly  with  Felton, a home,
cars, furniture, and other luxury  goods purchased by Felton with  the proceeds of
the FLiK Offering.  As described below, these proceeds constitute ill-gotten  gains
because Jennifer Felton  does not have a legitimate  interest in them.
24. Dale W.  Felton, 75, is the father of Felton and lives in Navasota,
Texas.   Dale Felton received approximately $100,000 from the proceeds of the
FLiK Offering, which, as described below, constitute ill-gotten  gains  because Dale
Felton does not have a legitimate  interest in them.
25. Stephanie L. Bro wn, 53, is the sister of Felton and lives  in
Cartersville, Georgia.  Brown received approximately $18,500 from the proceeds
of the FLiK Offering, which, as described below, constitute ill-gotten  gains
because Brown does not have a  legitimate  interest in  them.
26. Hyperion Holdings, LLC is a limited  liability  company formed
under the laws of Georgia, with its principal place of business in Atlanta, Georgia.
Hyperion Holdings  received approximately $124,250 from the proceeds of the
CoinSpark Offering, which, as described further below, constitute ill-gotten  gains
because Hyperion Holdings  does not have a  legitimate  interest in  them.

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OTHER RELATED INDIVIDUAL
27. Clifford Joseph Harris, Jr., a.k.a. “T .I.” or “Tip,” 39, is an Atlanta-
based rapper, actor, and producer.
BACKGROUND ON DIGITAL ASSETS AND ICOS
28. The term “digital  asset” or “digital  token” generally  refers to an asset
that is issued and transferred using distributed ledger or blockchain technology,
including  “cryptocurrencies,” “coins,” and “tokens.”
1
   Entities have offered and
sold  digital  assets in fundraising events, called “initial  coin offerings” or “ICOs,”
in exchange for consideration, often other digital  assets.    FLiK and CoinSpark each
offered and sold digital  assets as securities through ICOs.
29. Generally,  digital assets may entitle holders to certain rights related to
a venture underlying  the ICO, such as rights  to profits, shares of assets, rights  to
use certain services provided by the issuer, and/or voting  rights.   T hese digital
tokens may also be listed on online digital  asset  trading platforms, where they can
be traded for other digital  assets or fiat  currency.  The digital tokens are often
transferable immediately upon delivery  to investors.

1
  A blockchain  or distributed  ledger  is a peer-to-peer database spread across a network, that
records all  transactions in theoretically  unchangeable,  digitally  recorded data packages.   The
system relies  on cryptographic  techniques  for secure recording  of transactions.    Blockchains  or
distributed   ledgers  can  also  record  “smart  contracts,”  essentially   computer  programs  designed to
execute the terms of a contract when certain triggering  conditions  are met.

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30. ICOs are typically  announced and promoted through public  online
channels.   The prospectus soliciting  the public  to acquire tokens in  the ICO is
usually in the form of a “white paper,”  which constitutes marketing materials
describing the project and the terms of the ICO.   To participate, investors may
transfer funds to a   unique digital address set up by the issuer, and the issuer may
deliver tokens to the participants’ unique digital address on a distributed ledger or
blockchain.  This process may be partially  automated through the use of a smart
contract, as it  was for the FLiK  and CoinSpark ICOs.
31. On July 25, 2017, the Commission issued the DAO Report of
Investigation, advising that digital  tokens or coins may be securities, and thus,
subject to the federal securities laws.   Both the FLiK  and CoinSpark ICOs occurred
after the DAO Report was released.
FACTS
I. FLiK
A. FLiK, Felton, and Sparks Engaged in the Unregistered Offer and
Sale of Securities through the FLiK Offering.
Felton Launches the FLiK ICO
32. Felton was the owner of a small film production studio in Atlanta,
which focused mainly  on filming  commercials.   In July  2017, shortly after failing

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to raise funds for a film project and facing financial obligations,  Felton began
planning  the FLiK Offering.
33. Felton created a FLiK website and various social media accounts and
prepared a white paper and other marketing  materials for the FLiK ICO, which he
subsequently published on public online channels.
34. In the white paper, the FLiK website, and through various social
media accounts, Felton described FLiK as a video-streaming platform that would
accept FLiK tokens issued in the FLiK ICO as payment for content on the
platform.   Felton’s offering and promotional materials for the FLiK ICO
emphasized that FLiK tokens would appreciate in value with time, and highlighted
the ability  to trade them on digital  asset trading  platforms.  In these materials, as
well  as in social  media accounts, Felton also emphasized the potential profits from
resale of the tokens, encouraging investors to wait until  the FLiK token reached a
sufficiently high  resale price before selling.
35. At the time of the FLiK Offering, the FLiK platform had not been
built.  Nonetheless, the white  paper touted the film  and entertainment industry
experience of Felton and others on the FLiK team, including  Harris, a well-known
Atlanta-based rapper, actor, and producer, that gave them the skill  set necessary to
ensure FLiK’s success.

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36. The terms of the FLiK white paper and marketing materials further
provided that the funds raised in the FLiK ICO would be pooled and that a
significant  portion would be used by the FLiK management team to develop
FLiK’s online distribution platform to allow artists to sell  or rent their work; to
create a video  streaming platform; to license  content; and to generally  market and
promote the project.
 The FLiK ICO Solicited Investors Worldwide, Including in the United States
37. Felton conducted the FLiK ICO from August  20, 2017 through
September 20, 2017.  During the FLiK  ICO, investors could purchase FLiK tokens
by sending  ETH to the FLiK smart contract.   The FLiK website and social  media
accounts, which were hosted or accessible in the United States, solicited potential
investors from around the world, including  in  the United States.
38. Felton paid for Facebook advertisement campaigns to promote the
FLiK ICO worldwide, including in    the United States.   These ad campaigns, which
ran from at least  September 1, 2017 through September 11, 2017, specifically
targeted male users, ages 18-50, located in  the United States, among other places,
whose interests included “ICO,” “Investment,” and “Investor.”   The “text” of the
ads, which appeared on these users’ Facebook News Feeds, included “Video
Streaming Built  on the Blockchain. Co-Owned by T.I. [Harris],” which reached

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over 2,000 users in the United States, including at least 64 users in Georgia, and
“FLIK ICO – Entertainment Revolution! 10 FLIK for Just .002 ETH!” which
reached over 4,000 users in the United States, including  96 users in Georgia.
39. Sparks, a social  media manager for Harris, engaged in selling  efforts
for FLiK.   Sparks announced the FLiK ICO, and that Harris was a co-owner of
FLiK, on Harris’ social  media accounts, including  Twitter and Facebook.   At the
time of the FLiK ICO, Harris had more than 7 million  followers on Twitter.  The
announcement of the FLiK ICO that Sparks posted on Harris’s social media
accounts, and the assertion Sparks made in  those posts that Harris was a co-owner
of FLiK, substantially amplified  the reach of FLiK’s marketing campaign for the
FLiK ICO.   Sparks made at least one post to Harris’s official  Twitter and Facebook
accounts that included the FLiK website address, where investors could purchase
FLiK tokens during the ICO.
40. At Felton’s request, Harris also  arranged the FLiK ICO to be
promoted on the Twitter, Instagram, and Facebook accounts of a well-known
American actor, comedian, and producer (“Celebrity 1”), who, at the time of the
FLiK ICO, had more than 34 million  followers  on Twitter.   The announcement of
the FLiK ICO on Celebrity 1’s social media accounts also substantially amplified
the reach of FLiK’s marketing campaign for the FLiK ICO.

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41.  T hroughout the FLiK Offering, Felton  also anonymously sold
millions  of FLiK tokens to investors through a so-called “decentralized digital
asset trading  platform”
2
 and through an Australia-based digital  asset trading
platform (the “Australian Trading Platform”), as discussed below.
42. From September 1 through September 13, 2017, Felton transferred
more than 11 million  FLiK tokens to the “decentralized digital  asset trading
platform” where he began attempting to sell the tokens anonymously to
unsuspecting investors.

43. Also  in  September 2017, Felton arranged to have FLiK  tokens listed
for sale on the Australian Trading Platform.   On the day that the FLiK token,
which had no restrictions on resale to U.S. investors, was listed  for sale  on the
Australian Trading Platform, Felton deposited more than 17.6 million  FLiK  tokens
into his account at the Australian Trading Platform.   In total, from October 6, 2017,
through October 21, 2017, Felton deposited more than 34.7 million  FLiK tokens
into his account at the Australian Trading Platform.

2
  A “decentralized  digital  asset trading  platform”  typically  refers to  a trading  platform
where smart contracts (i.e. computer  code) are utilized  to facilitate  peer-to-peer trading  of digital
assets.

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FLiK’s Offer and Sale of FLiK Tokens Was an Offering of Securities
44. Based upon the foregoing,  the FLiK tokens offered and sold in the
FLiK Offering were offered and sold as “investment contracts,” and thus securities,
within the meaning of Section 2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)]
and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].
45. No registration  statement was ever filed  or in  effect for the offers and
sales of FLiK tokens, and no exemption from registration was available for the
FLiK Offering.
B. Felton and FLiK Engaged in Deceptive Conduc  t to Defraud FLiK
Investors and Made and Disseminated Material
Misrepresentations to Sell FLiK Tokens.
46. Felton and FLiK knowingly, recklessly,  or negligently  engaged  in
deceptive conduct to defraud FLiK investors by, among other acts:
a) making and disseminating material  misstatements to promote
FLiK tokens during the FLiK Offering;
b) diverting  60 million  FLiK  tokens to Felton’s digital  asset
accounts without disclosing  this in the FLiK white paper or on the FLiK
website, and then anonymously selling them FLiK tokens on digital  asset
trading platforms;

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c) continuing to issue materially false and misleading promotional
statements to pump up the price and to generate a market to support Felton’s
dumping of millions  of FLiK tokens in    sales subsequent to the ICO; and
d) using the proceeds of the FLiK Offering for Felton’s personal
use and to purchase luxury goods and gifts rather than for the purposes
disclosed in the offering materials.
47. FLiK and Felton raised approximately $250,000 from investors
through the FLiK ICO and at least $2.2 million  more through Felton’s subsequent
FLiK offers and sales in the FLiK Offering.
48. Felton, the sole owner of FLiK, personally made all the statements on
the FLiK website, white paper, social media accounts, including Facebook,
Instagram, Twitter, bitcointalk.org, and the Telegram Messaging App
(“Telegram”), and other marketing materials.
49. Felton made and disseminated numerous material misstatements,  all
of which were to create a false and misleading  appearance to investors that FLiK
and the FLiK Offering were financially  viable or successful as well  as financially
rewarding for investors who would be able to acquire a   purportedly limited  supply
of FLiK tokens in the FLiK Offering.   These statement appeared on the FLiK

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website, white paper, social  media accounts, and other marketing  materials,
including  the examples below.
50. On August  17, 2017, before the FLiK ICO began, Felton transferred
60 million  FLiK tokens to himself.  He did not disclose the existence of these
tokens or this transfer in the FLiK white paper or otherwise on the FLiK website or
social media posts.   This omission  was material, as it  made other statements about
FLiK token’s availability  for  allegedly  limited sale and distribution,  including the
statement regarding  the purported FLiK token “burn” (removal from circulation)
that would also occur following  the FLiK ICO, in the white paper false or
misleading.   Felton knew or was reckless in not knowing that his omission of this
material fact made the other statements in the white paper false or misleading.
51. In the marketing materials Felton created when the FLiK ICO began,
Felton claimed that FLiK would be a streaming video platform, and that he was
finalizing  negotiations to license the digital  film  libraries of several major
production studios.  The marketing materials claimed that FLiK tokens would be
used to rent or buy digital  content on the FLiK platform.
52. Felton never incorporated FLiK or formed any business entity for the
FLiK Offering.  No FLiK streaming platform ever existed.  Felton has admitted
that he had no discussions with the production studios with which he claimed to be

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finalizing  agreements.   The misstatements that he made were material, and Felton
knew or was reckless in not knowing that these statements were false when he
made them.
53. Also from the beginning  of the FLiK Offering, Felton announced on
the FLiK website and social media accounts that Harris was a co-owner of FLiK.
In fact, Harris was never a co-owner of FLiK.  These misstatements made by
Felton were material,  and Felton knew or was reckless in not knowing that these
statements were false when he made them.
54. On August  20, 2017, the first  day of the FLiK  ICO, Felton announced
that “FLiK has another co-owner, but we can’t name him  just yet,” and that the
new co-owner “currently owns a large  stake in  another video  stream platform (one
you’ve heard of).”   FLiK never had any co-owners; Felton was its  only  owner.
Felton knew or was reckless in not knowing that these material  statements he made
were false  when he made them.
55. Within  days of launching  the FLiK ICO, Felton announced on the
FLiK website and in an update to the white paper that “the company has secured a
significant  investment through a private placement offering in accordance with the
Securities & Exchange Commission (SEC) Rule 501 of Regulation D.”  Felton
knew or was reckless in not knowing that these material statements were false

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when he made them.   Felton has admitted that he never conducted any private
offering of FLiK, or provided an equity position to anyone other than himself.  No
party made any filing  with the Commission pursuant to Regulation D with respect
to FLiK.
56. Further, Felton made a series of additional material misrepresentations
about FLiK, including misstatements on August  26 and on September 3, 16, and
19, 2017, respectively, regarding a purported private investment in  FLiK.
57. On August  26, 2017, Felton announced on the Telegram messaging
app that FLiK  had “a big  buyer making  a move into  FLiK this  week . . . buying
$500,000 worth of tokens.”   This statement was material, as this  would have been
double the full amount raised in the ICO.  Felton knew or was reckless in not
knowing  that this misstatement was false  when he made it.  No one purchased
$500,000 worth of tokens.
58. On August  26, 2017, Felton announced that “Yesterday, we received
word that FLiK will  be integrated into the new U.S. Military’s set-top box.  This
means we’ll  have access to potentially  2,000,000 customers (1.2M active U.S.
military  and 800,000 reserve U.S. military)  as soon as our platform is  ready.   This
is  HUGE news!”    Neither the Department of Defense nor the defense contractor
building  the interface for the military’s set-top box  had any communications with

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Felton or any representative of FLiK about integrating  FLiK into that interface.
These misstatements by Felton were material, and Felton knew or was reckless in
not knowing that these statements were false when he made them.
59. On September 3, Felton announced on Telegram that the buyer who
had purportedly purchased $500,000 worth of FLiK tokens actually “didn’t receive
tokens” but instead “took a small equity position” in FLiK.  He added that the
investor had a  “significant  connection . . . at a large movie studio.”  These
statements were material, and Felton knew or was reckless in not knowing that
these statements were false when he made them.
60. On September 3, 2017, Felton announced that Individual A, the
chairman of a  well-known Bitcoin payment-processing company, was handling  the
listing  of FLiK tokens on other trading platforms, and had been recruited to “get
things done” for FLiK, including  “talking  with [another digital-asset  payment-
processing company] about integrating  FLiK tokens into  their app.”  Felton has
admitted that Individual  A had no involvement with listing  FLiK tokens on any
trading platforms, nor was individual  A involved in any communications with the
other digital-asset  payment-processing company about FLiK.   These misstatements
by Felton were material, and Felton knew these statements were false when he
made them.

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61. On or around September 16, Felton announced that FLiK had raised
“over 450 ETH via the ICO and over $2.2M in private equity capital.”  Felton’s
statement regarding private equity was material, as $2.2 million  in private equity
would have been almost ten times the amount Felton actually had raised in the
FLiK ICO.  Felton knew or was reckless in not knowing  that this  statement was
false when he made it.  In fact, the Felton sales  that occurred after the ICO phase of
the FLiK Offering netted Felton personally approximately  $2.2 million.   Felton
thus invented the private equity investment to mislead investors regarding his
transfer of FLiK tokens to himself and his own massive sell-off of FLiK tokens,
which were visible  to investors on the blockchain, but not publicly traceable to
him.
62. On September 19, Felton announced that the “private equity”
investors mentioned three days earlier  had “wired funds and we reserved coins for
them.”  This misstatement was material, and Felton knew or was reckless in not
knowing that this statement was false when he made it.
63. Also on September 19, 2017, Felton responded to concerns investors
raised about the significant  volume of FLiK tokens being sold on the
“decentralized digital  asset platform” to which Felton  had transferred more than 11
million  FLiK tokens.  In a post on FLiK’s Telegram channel, Felton cast the blame

24

on Harris and promised that Harris would rectify the problem by buying back the
tokens.   In fact, Felton has admitted that he never had any information about
personal sales by Harris.  This was yet another attempt by Felton to conceal his
own massive sales of FLiK tokens to investors at a time when he was misleading
investors about the success of the venture.   These misstatements were material, and
Felton knew or was reckless in not knowing that these statements were false when
he made them.
64. Also on September 19, 2017, Felton announced that FLiK intended to
add music streaming to its platform, but needed “to wait for one of our co-owners
to unwind himself  from an ownership position  in  another major music streaming
service.”   FLiK never had any co-owners; Felton was its  only owner.  T his
misstatement by Felton was material, and Felton knew or was reckless in not
knowing that this statement was false when he made it.
65. Once the FLiK token was listed on the Australian Trading Platform,
Felton immediately began selling  massive amounts of his own FLiK tokens to the
public.
  The Australian Trading Platform permitted trading  by U.S.-based investors,
and U.S.-based investors purchased and sold the FLiK token through the
Australian Trading Platform.   On October 6, 2017, Felton sold  more than 770,920

25

FLiK tokens on the Australian Trading Platform, and on October 7, 2017, Felton
sold  another 1.67 million  FLiK  tokens on the Australian  Trading Platform.
66. On October 8, 2017, Felton referenced Company A, a digital  video
software development company, as FLiK’s “partner” on FLiK’s Telegram channel.
FLiK never entered into any partnership with Company A, nor any other
arrangement or agreement with  Company A.  This misstatement Felton made was
material, and Felton knew or was reckless in not knowing that this statement was
false when he made it.
67. Also  on October 8, 2017, Felton sold  more than 3.58 million  FLiK
tokens and on October 9, 2017, Felton sold another 16.7 million  FLiK tokens on
the Australian Trading Platform.   In total, from October 6, 2017 through October
20, 2017, when the FLiK token’s supply was supposed to become more limited
through a scheduled “burn” of tokens, Felton increased the supply by selling  more
than 33.91 million of additional  FLiK tokens for Bitcoin and ETH on the
Australian Trading Platform to investors, including  some investors located in the
United States.
68. On April  3, 2018, Felton posted on the FLiK website that “the OTT
(over-the-top) video streaming platform FLiK is  deploying  is  ready to go  and has
been tested and proven in  real-world production environments.”   FLiK never

26

deployed nor tested any video streaming platform, nor did it have a video
streaming platform “ready to go.”  These misstatements were material, and Felton
knew or was reckless in not knowing that these statements were false when he
made them.
69. On April  12, 2018, Felton sold  an additional  42,000 FLiK tokens on
the Australian Trading Platform.   On June 6, 2018, Felton sold an additional
369,533 FLiK tokens.   In total, from October 6, 2017 through June 6, 2018, Felton
sold  more than 34.39 million  FLiK tokens for BTC and ETH on the Australian
Trading Platform to investors, including  some investors located in  the United
States.  Felton subsequently transferred the proceeds of these sales to financial
accounts he controlled.

70. FLiK and Felton never built  a FLiK platform, never licensed  content
to stream on its  envisioned platform, and never had any operations or revenue from
operations.

71. FLiK token-holders have never been able to use their tokens on a
FLiK (or any other) platform, which was never created.  There is currently no
market for FLiK tokens, which have lost essentially all  of their value.
72. Felton obtained approximately $2. 5 million  in  illegal   profits  from the
foregoing fraudulent conduct.

27

II. CoinSpark
A. CoinSpark, Felton, White and Smith Engaged in the Unregistered
Offer and Sale of Securities through the CoinSpark Offering.
Felton, White and Smith Launch the CoinSpark ICO

73. Even before the FLiK ICO concluded and while Felton continued to
conduct the FLiK Offering, Felton began working on his next digital  asset
securities offering.  Frustrated with his inability  to get the FLiK token listed  on
more digital  asset trading  platforms, Felton wanted to build his own digital  asset
trading platform under the name CoinSpark.

74. Felton registered the CoinSpark website domain in  September 2017,
and, in  October 2017, began meeting with White and Smith,
 independent
contractors who previously worked with Felton on filming  commercials, to plan
the CoinSpark ICO and the issuance of its token, the SP ARK token.
75. White and Smith prepared marketing materials, including  posts for
social media, “countdowns,” graphics, videos, and other materials  for the
CoinSpark ICO.   Felton reviewed these materials  before they were posted.   White
and Smith also met with Felton to discuss logistics,  timing, and how they could
support the CoinSpark ICO.   They reviewed the CoinSpark ICO white paper,
drafted by Felton, and provided feedback to Felton, and discussed the details of the

28

offering  and its  terms, including  the planned dividend  that CoinSpark would  pay to
all  SPARK token-holders, which was disclosed  in  the white paper.
76. The white paper provided that SPARK tokens in  the CoinSpark ICO
would be offered and sold in exchange for ETH.   The white paper and other
promotional materials claimed that it was “inevitable” that SPARK tokens would
appreciate in value with time, and heavily promoted the CoinSpark “dividend,”
which would pay out 25% of CoinSpark’s profits quarterly to token-holders.  On
CoinSpark’s website and in  the white paper, Felton also  touted the future ability  to
trade SPARK tokens on digital  asset trading platforms, including  CoinSpark’s
platform.
77. The members of the CoinSpark team were not disclosed on the
CoinSpark website or in the white paper, and Felton never disclosed to investors
that he was the principal behind the CoinSpark ICO.   Felton nevertheless
highlighted  in the white paper and on CoinSpark’s website CoinSpark
management’s ability  to successfully develop its digital  asset trading platform.
Without disclosing  the identities of any of the CoinSpark team members, Felton
repeatedly touted the CoinSpark team’s “Wall  Street” background and “deep roots
in  crypto.”   He also emphasized CoinSpark’s claimed  partnerships with established
organizations.

29

78. The SPARK token’s value depended entirely upon the development of
the digital  asset trading platform by the CoinSpark management.   The CoinSpark
website and white  paper claimed that CoinSpark was actively developing the
digital  asset  trading platform, which Felton claimed was almost ready, and in  the
final testing phase.
The CoinSpark ICO Solicited Investors Worldwide, Including in the United
States

79. Felton launched the CoinSpark ICO on February 14, 2018,
announcing that it would run through March 14, 2018.  Before the launch, Felton
created a CoinSpark website, on which he published a white paper and other
marketing materials.  Felton also tasked Smith with creating CoinSpark social
media accounts, and approved the posts Smith  made on these accounts.  The
website and social  media accounts, which were hosted or accessible  in  the United
States, solicited  potential  investors from around the world, including  in  the United
States.
80. Felton paid for a   Facebook advertising campaign promoting
CoinSpark, which ran from December 22, 2017 through January 19, 2018, and
which specifically  targeted, and reached, users in the United States.   The ad
campaign targeted male users, ages 18-45, located in  the United States, among

30

other places, whose interests included Bitcoin,  cryptocurrency, Ripple, Ethereum,
or Coinbase.
81. Felton also  offered to send a purported private-placement
memorandum to any U.S. investors who might  be interested in participating in the
ICO, and told one U.S. investor who resides in this District and invested in  the
CoinSpark ICO that the CoinSpark ICO was “accidentally letting  US investors slip
through the door right  now.”   Felton sent this  U.S. investor a link  to the CoinSpark
ICO website, in  case “you know anyone that wants to jump on it.”  At least one
non-accredited U.S. investor located in  the Northern District  of Georgia invested in
the CoinSpark ICO.
White and Smith Promoted the CoinSpark ICO and the SPARK Tokens

82. In addition to running the official  CoinSpark social  media accounts,
Smith set up a Twitter account under the name Greg Ira, which he used to promote
the ICO.   Greg Ira purported to be a  financial  journalist  with no connection to
CoinSpark.   The Greg Ira Twitter account never disclosed any connection to
CoinSpark, and did not disclose that Felton had promised Smith full-time
employment with CoinSpark, at a rate of approximately $60,000 per year, if
CoinSpark raised sufficient  funds.   In early 2018, the Greg Ira account retweeted
CoinSpark promotional material, expressed excitement for the CoinSpark ICO, and

31

tweeted a link  to an article  that Smith had written under the name Greg Ira,
promoting the CoinSpark ICO.
83. Smith also  moderated the CoinSpark Telegram forum, and posted
there under both the official  CoinSpark Telegram accounts and a false name,
“Walter.”    Using the “Walter” account, Smith made posts in February 2018
promoting the CoinSpark ICO and in July  2018 encouraging  SPARK token-
holders to hold onto their tokens rather than taking advantage of the refund
CoinSpark was offering.   “Walter” never disclosed  any affiliation  with CoinSpark
other than as an investor, and did not disclose that Felton had promised Smith full-
time employment, if CoinSpark raised sufficient funds.
84. In addition to creating, reviewing, and providing  feedback on content
for the official CoinSpark social media accounts, in July 2018 White published a
promotional article  under the pseudonym “CryptoCletus.”   In this article, White
discussed the value of the SPARK token.   He did not disclose  his  affiliation  with
CoinSpark, nor did he disclose that Felton had promised him full-time  employment
with CoinSpark, if CoinSpark raised sufficient funds.
CoinSpark’s Offer and Sale of SPARK Tokens Was  an Offering of Securities

85. The SP ARK tokens offered and sold  in  the CoinSpark Offering were
offered and sold as “investment contracts” and thus securities  within  the meaning

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of Section 2(a)(1) of the Securities  Act  [15 U.S.C. § 77b(a)(1)] and Section
3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].
86. No registration  statement was ever filed  or in  effect for CoinSpark
Offering, and no exemption from registration was available for that offering.
B. Felton and CoinSpark Engaged in  Deceptive Conduct to Defraud
CoinSpark Investors and Made and Disseminated Material
Misrepresentations to Sell SPARK Tokens.
87. Felton and CoinSpark knowingly, recklessly,  or negligently  engaged
in    deceptive conduct to defraud CoinSpark investors by, among other acts:
a)  making and disseminating material  misstatements to promote
SP ARK tokens during the CoinSpark ICO;
b) diverting  24 million unsold SPARK tokens to Felton’s own
digital  asset accounts for subsequent sale by Felton;
c) continuing to issue false promotional statements to pump up the
price of SPARK tokens and to generate a market to support Felton’s sales  of
the SPARK tokens he had diverted to his own account;
d) engaging  in unlawful matched trades to create a false
appearance of trading  activity  and to artificially  increase the trading price of
SPARK tokens; and

33

e) using the proceeds of the CoinSpark Offering for Felton’s
personal use rather than for the purposes disclosed in the offering materials.
88. Felton, the sole  owner of CoinSpark, personally made the statements
on the CoinSpark website and in its white paper.   Felton made statements, and
approved the statements made by Smith, on the CoinSpark social media accounts,
such as Telegram.
89. Felton made and disseminated numerous material misstatements,  all
of which were to create a false and misleading  appearance to investors that
CoinSpark and the CoinSpark ICO were financially  viable  or successful.   These
statements appeared in the CoinSpark website, white paper, social  media accounts,
and other marketing materials, including  the examples below.
90. In the CoinSpark website, white paper, and other offering  materials
created and disseminated by Felton, he claimed that he was building  an
“international  digital  asset exchange.”    Felton initially  promised a  June 1, 2018
launch date for the exchange; but from February 5 through April  20, 2018, he
claimed the exchange was on track to launch even earlier, by April  30, 2018.
Felton claimed that the CoinSpark exchange  would offer a  trading  platform for a
number of digital  assets, including  SPARK tokens, and that SPARK token-holders
could use their SPARK tokens to pay trading fees, which would be discounted to

34

those paying  in  SPARK tokens.   Felton claimed  that SPARK tokens would entitle
token-holders to receive a  quarterly dividend  of twenty-five percent of
CoinSpark’s quarterly net profits.
91. The CoinSpark trading platform was never fully operational, and as
Felton used virtually all  of the funds raised in the CoinSpark Offering for his own
personal use, CoinSpark never turned a profit, and no dividend was ever paid to
token-holders.
92. Felton posted a fake “review” of CoinSpark’s ICO to an online
publishing  platform on January 20, 2018, using the name of an individual  who had
actually reviewed other ICOs (“Individual 2”).   This fake review positively
assessed the CoinSpark ICO and the likelihood  of a substantial return on the
investment; purported to speculate about the millions  (or tens of millions) of
dollars that had already been invested by the team in building  the exchange;
posited “rumors” that  “the CoinSpark team consists of former and current Wall
Street traders and hedge fund players who have been involved with cryptocurrency
for the past  5+ years”; and concluded that “I am certainly going  to partake in the
ICO and I hope you will  consider it as well.”  The article was also cross-posted on
another website on or around January 24, 2018.

35

93. These misstatements were material, and were false  and misleading.
Felton did not “partake in the ICO.”  He also did not disclose that he was the sole
owner of CoinSpark.   He used a false name to appear disinterested and to lend
credibility  to his review of his  own ICO.   Felton knew or was reckless in not
knowing that at the time that he disseminated this article that it was false and
misleading,  and that readers would be misled by, among other things, his failure to
disclose his ownership of CoinSpark.
94. By at least February 7, 2018, Felton stated on the CoinSpark website
that CoinSpark had retained a well-known public-company auditing  firm (“Audit
Firm”), to “provide world-class external assurance services to verify our
accounting and subsequent dividend payments.”   Felton further claimed that
“[Audit Firm] will  perform an external  audit (also  known as Assurance Services)
of the CoinSpark financials  twice  per year to ensure that our financials  are in
accordance with FASB (Financial  Accounting  Standards Board) IASB
(International Accounting  Standards Board) and U.S. GAAP (United States
Generally Accepted Accounting Principles).”   These misstatements were material,
and Felton knew or was reckless in not knowing that these statements were false at
the time that he made them.

36

95. CoinSpark never retained Audit Firm, and Audit Firm never agreed to
provide the services described by Felton.   Audit  Firm does not offer the services
described by Felton.
96. On or around February 7, 2018, Felton, or someone else acting at his
direction, posted on Telegram that CoinSpark was “working with  the Cayman
government to become the first  officially  licensed crypto exchange in the country.”
CoinSpark had no such discussions with  the government of the Cayman Islands.
These misstatements by Felton were material, and Felton knew or was reckless in
not knowing that this statement was false at the time that he made it.
97. On or around February 7, 2018, Felton, or someone else acting at his
direction, stated in a Telegram post that “U.S. investors must be accredited to
purchase SPARK.   CoinSpark follows SEC regulations  when US buyers are
involved.”  In fact, Felton permitted non-accredited U.S. investors to purchase
SPARK in  the CoinSpark ICO and did not follow SEC Regulations with respect to
U.S. investors.  These statements by Felton was material, and Felton knew or was
reckless in not knowing that at the time that he made these statements that
CoinSpark did not follow SEC Regulations with respect to U.S. investors and did
not require that U.S. investors be accredited to purchase SPARK.

37

98. On February 10, 2018, Felton, or another person acting at Felton’s
direction, claimed on Telegram that “millions  of dollars have already been
invested” in CoinSpark “to get things moving and guarantee that the exchange will
be developed and launched in  April.”   Millions  of dollars had not, and were not
ever, invested in  CoinSpark; also, the exchange  was not developed or launched in
April  2018.  These misstatements were material, and Felton knew or was reckless
in not knowing that these statements were false or misleading  when he made them.
99. On the CoinSpark website and in various offering and promotional
materials, as well as on Telegram, Felton claimed, directly or indirectly, that
“CoinSpark is  run by a team of cryptocurrency experts.”   Felton has admitted that
no member of the CoinSpark team was a “cryptocurrency expert.”  This
misstatement by Felton was material, and Felton knew or was reckless in not
knowing that when he made this statement that it was false.
100. While CoinSpark and Felton arranged for a basic trading platform to
be programmed, it was never fully launched.   Felton abandoned CoinSpark by
September 2018, in favor of new ventures, leaving  both the company and the token
defunct.   The secondary market for SPARK tokens never developed, and very few
of the original  investors were ever able to sell  their tokens, which have lost
essentially all of their value.

38

101.  The CoinSpark Offering raised approximately 460 ETH from
investors, which Felton transferred (after the CoinSpark ICO ended) to a wallet
address he controlled.
102. Felton profited from the foregoing fraudulent conduct, diverting to
himself approximately $282,418 in illegal  proceeds raised from investors.
Felton Engaged in Manipulative Trading of SPARK Tokens
103. After the conclusion of the CoinSpark ICO, Felton engaged in
manipulative  trading  techniques such as wash and matched trading in  an attempt to
artificially  inflate the price of SPARK tokens.
104. “Matched trades” occur when a person, for the purpose of creating a
false or misleading  appearance of active trading  in  a security, enters an order to
buy or sell that security with the knowledge that a substantially similar  order has
been or will  be placed to trade the security.
105. “Wash trades” occur when a  security is  traded between two accounts
with no change in beneficial  ownership for the purpose of creating a false or
misleading  appearance of active trading in the security.
106. On March 21, 2018, Felton transferred the remaining  approximately
24 million  unsold SPARK tokens to an ethereum address he controlled for his own
personal use.   Once SPARK tokens began trading  on a “decentralized digital  asset

39

trading platform,” Felton transferred small amounts of SPARK tokens to another
individual,  for use in matched trades on a decentralized trading platform.  Felton
also  transferred hundreds of thousands of SPARK tokens to other ethereum
addresses he controlled for that same purpose.
107. On March 30, Felton suggested  to others that they “conference
tonight”  to “[s]ee how we make it go up 20% quickly.”  From March 30 through
April  3, 2018, Felton and others discussed via text messages Felton’s plan to
engage in manipulative trading to increase the price of SPARK tokens, including a
plan to “buy back and forth to get things going  at a good rate.”   Felton proposed
that they trade amongst themselves on the platform to create the false  appearance
of activity and to create a “floor” for the trading price of SPARK tokens.
108. During and following these text messages, Felton engaged in
manipulative  trading  of SPARK tokens.   In at least  eight  transactions on April  2,
2018, Felton engaged  in matched trades on the decentralized trading platform.  On
April  12, 2018, Felton also engaged in wash trades between two different ethereum
addresses that he controlled.
109. Felton engaged in this trading activity to enable him to sell  the 24
million  SPARK tokens that he had misappropriated following  the ICO.
Nonetheless, he was unable to sell a significant  volume of SPARK tokens.

40

110. Felton also  attempted to list  the SPARK token on the Australian
Trading Platform as he had with the FLiK token, but neither the Australian  Trading
Platform nor any other digital  asset  trading  platform listed  the SPARK token, and
Felton was unable to sell any of his  more than 24 million  SPARK tokens on the
Australian Trading Platform or any other digital  asset  trading platform.
III. The  Relief Defendants Received Ill-Gotten Gains.
A. Jennifer Felton
111. In November 2017, shortly after the FLiK Offering, Felton  used the
proceeds of the FLiK Offering to purchase a new home, which cost more than $1
million.  In October 2017, Felton transferred $2.2 million  from his digital  asset
account to his  checking account, and used these funds to purchase a home with his
wife, Jennifer Felton.   He used additional  funds from the proceeds of the FLiK
Offering to purchase a Ferrari,  a Chevy Tahoe, furniture, and other luxury goods,
which he shared with  Jennifer Felton.
112. In December 2017, Felton used proceeds of the FLiK Offering to
purchase approximately $32,000 in jewelry, including  a diamond ring and diamond
earrings, which he gave to Jennifer Felton that month.
113. On March 15, 2019, Felton transferred $20,000 from his Hyperion
Holdings  account to Jennifer Felton.  All  of the funds in the Hyperion Holdings

41

account appear to have originated  from the proceeds of the FLiK and CoinSpark
Offerings.
114. In addition to the March 15, 2019 transfer to Jennifer Felton, Felton
transferred $11,500 in CoinSpark proceeds from the Hyperion Holdings account to
Felton’s checking account on November 23 and December 6, 2018.   On January
14, 2019, Felton wrote a check for $5,000 from his  checking  account to Jennifer
Felton.
115. Finally,   between January 7 and March 19, 2019, Felton also
transferred approximately $11,400 in Bitcoin prepaid debit cards to Jennifer
Felton.   Those Bitcoin prepaid debit cards were loaded with funds from the
proceeds of the CoinSpark Offering, which Felton had commingled with his
proceeds from the FLiK Offering.
116. Jennifer Felton did not have a legitimate  claim to the home, cars,
furniture, or other luxury  goods  that Felton purchased with the proceeds of the
FLiK Offering; nor did she have a legitimate  claim to the jewelry that Felton
purchased for her with the proceeds of the FLiK Offering.  Jennifer Felton also did
not have a legitimate  claim to the funds Felton transferred to her from the
CoinSpark Offering.

42

117. Jennifer Felton’s receipt of a  home, cars, furniture, other luxury
goods, jewelry, and $36,400 in transfers from Felton, from the proceeds of the
FLiK Offering and CoinSpark Offering, constitute ill-gotten  gains derived from
FLiK, CoinSpark, and Felton’s violations alleged in this Complaint.
B. Dale Felton
118. On December 6, 2017, Felton wired $100,000 in proceeds from the
FLiK Offering to his father, Dale Felton.   Dale Felton did not have a legitimate
claim  to these funds, and described them to the staff of the Commission as a loan
from Felton that Dale Felton never repaid.
119. The $100,000 received by Dale  Felton from the proceeds of the FLiK
Offering  constitutes ill-gotten  gains  derived from FLiK and Felton’s violations
alleged in this Complaint.
C. Stephanie Brown
120. On or around February 1, 2018, Felton used the proceeds of the FLiK
Offering to make a gift  of $18,500 to his  sister, Brown.  Brown had no legitimate
claim to these funds, and the gift letter signed by Felton states that the funds are “a
bona fide gift.”

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121. The $18,500 received by Brown from the proceeds of the FLiK
Offering  constitutes ill-gotten  gains  derived from FLiK and Felton’s violations
alleged in this Complaint.
D. Hyperion Holdings
122. Felton diverted the proceeds from the CoinSpark Offering to accounts
that he controlled at various digital  asset trading platforms.  He converted the funds
into Bitcoin, commingled these funds with  proceeds from the FLiK Offering, and
transferred the funds to other accounts that he controlled.
123. From one of these accounts, Felton purchased a number of prepaid
Bitcoin debit cards, and then transferred approximately $11,400 worth of these
cards to Jennifer Felton, as discussed in paragraph 115.   Using a payment
processing account Felton set up for Hyperion Holdings  to enable him to accept
payment in  such cards, he cashed out the remaining prepaid Bitcoin  cards for
$124,250 in deposits into the Hyperion Holdings checking account, which Felton
controlled.  Felton also arranged for a deposit of $2,660 into the Hyperion
Holdings  account on May 11, 2018.
124. Hyperion Holdings  had no legitimate  claim to these funds, as it had no
operations and was merely an alter-ego for Felton.  Felton used the Hyperion
Holdings  bank account to pay for his  personal expenses, including  meals,

44

payments to his  criminal  defense attorney, and transfers to his  personal checking
account.
125. The approximately $127,000 received by Hyperion Holdings  from the
proceeds of the FLiK  and CoinSpark Offerings  constitutes ill-gotten  gains derived
from FLiK, CoinSpark, and Felton’s violations  alleged  in  this  Complaint.

FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a)-(c)
(FLiK, CoinSpark, and Felton)
126. The Commission repeats and realleges  paragraphs 1 through 125 of its
Complaint.
127. By virtue of the foregoing, Defendants FLiK, CoinSpark, and Felton,
directly or indirectly, by the use of the means and instrumentalities of interstate
commerce or of the mails,  in  connection with the purchase or sale  of securities,
knowingly or recklessly, employed devices, schemes, or artifices to defraud, made
untrue statements of material  fact and omitted to state material  facts necessary in
order to make the statements made, in light  of the circumstances under which they
were made, not misleading,  and engaged  in  acts, practices, and courses of business
which operate or would operate as a fraud or deceit.
128. As  described herein, FLiK, CoinSpark, and Felton knowingly  or
recklessly engaged in schemes and deceptive conduct to defraud the FLiK and

45

CoinSpark investors and made and disseminated material misstatements in FLiK’s
and CoinSpark’s white papers and other marketing materials to sell the FLiK and
SPARK tokens during  the FLiK and CoinSpark Offerings.
129. By virtue of the foregoing, Defendants FLiK, CoinSpark, and Felton
violated, and unless restrained and enjoined will  continue to violate, Section 10(b)
of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5(a)-(c) [17 C.F.R. §
240.10b-5(a)-(c)], promulgated thereunder.
SECOND CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(1)
(FLiK, CoinSpark, and Felton)

130. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
131. By virtue of the foregoing, in the offer or sale of securities, by the use
of the means or instruments of transportation or communication in  interstate
commerce or by use of the mails, directly or indirectly, Defendants FLiK,
CoinSpark, and Felton knowingly  or recklessly employed devices, schemes or
artifices to defraud.
132. As  described herein, FLiK, CoinSpark, and Felton knowingly or
recklessly engaged  in  schemes to defraud the FLiK  and CoinSpark investors and
made and disseminated material misstatements in  FLiK’s and CoinSpark’s white

46

papers and other marketing materials to offer and sell  the FLiK  and SPARK tokens
during the FLiK and CoinSpark Offerings.
133. By reason of the conduct described above, Defendants FLiK,
CoinSpark, and Felton, directly or indirectly violated and, unless enjoined will
again violate, Securities Act Section 17(a)(1) [15 U.S.C. § 77q(a)(1)].
THIRD CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)(2) and (3)
(FLiK, CoinSpark, and Felton)

134. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
135. By virtue of the foregoing, in the offer or sale of securities, by the use
of the means or instruments of transportation or communication in  interstate
commerce or by use of the mails,  directly  or indirectly,  Defendants FLiK,
CoinSpark, and Felton negligently  obtained money or property by means of an
untrue statement of a material fact or omitted to state a material fact necessary in
order to make the statements made, in light  of the circumstances under which they
were made, not misleading;  and/or engaged  in  transactions, practices or courses of
business which operate or would operate as a fraud or deceit upon the purchaser.
136. As  described herein, FLiK, CoinSpark, and Felton negligently made
and disseminated material misstatements in FLiK’s and CoinSpark’s white papers

47

and other marketing materials in the offer and sell the FLiK and SPARK tokens
during the FLiK and CoinSpark Offerings and engaged  in  transactions, practices or
course of business to defraud the FLiK  and CoinSpark investors.
137. By reason of the conduct described above, Defendants FLiK,
CoinSpark, and Felton, directly  or indirectly  violated  and, unless enjoined will
again  violate, Securities Act Section 17(a)(2) and (3) [15 U.S.C. § 77q(a)(2), (3)].
FOURTH CLAIM FOR RELIEF
Violations of Exchange Section 9(a)(1)
(Felton)

138. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
139. By virtue of the foregoing, Defendant Felton directly or indirectly, by
use of the mails  or any means or instrumentality  of interstate commerce, for the
purpose of creating a false or misleading  appearance of active trading in any
security other than a government security, or a false or misleading  appearance with
respect to the market for any such security (A)  effected transactions in  a security
which involved  no change in  the beneficial  ownership thereof; or (B) entered an
order or orders for the purchase of the security with the knowledge that an order or
orders of substantially the same size, at substantially the same price, for the sale of
the security had been or would be entered by or for the same or different parties; or

48

(C) entered any order or orders for the sale  of the security with  the knowledge  that
an order or orders of substantially the same size, at substantially the same price, for
the purchase of the security had been or would be entered by or for the same or
different parties.
140. As described herein, Felton knowingly or recklessly engaged in
unlawful matched trades to create a false appearance of trading  activity  and to
artificially  increase the trading price of SPARK tokens.
141. By reason of the conduct described above, Defendant Felton directly
or indirectly violated and, unless enjoined will  again violate, Section 9(a)(1) of the
Exchange Act [15 U.S.C. § 78i(a)].
FIFTH  CLAIM FOR RELIEF
Violations of Sections 5(a) and 5(c) of the Securities Act
(All Defendants)
142. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
143. As  described herein, Defendants FLiK, Felton and Sparks, directly or
indirectly, offered and sold via Internet digital  asset securities, the FLiK tokens, in
the FLiK Offering.  No registration  statement was ever filed  or in  effect for the
offers and sales of the FLiK tokens.

49

144. As  described herein, Defendants CoinSpark, Felton, Smith and White,
directly or indirectly, offered and sold via Internet unregistered digital  asset
securities, the SP ARK tokens, in    the CoinSpark Offering.  No registration
statement was ever filed  or in  effect for the offers and sales  of the SPARK tokens.
145. By reason of the conduct described above, Defendants, directly or
indirectly violated and, unless enjoined will  again violate, Securities Act Sections
5(a) and 5(c) [15 U.S.C. §§ 77e(a) and e(c)].
SIXTH CLAIM FOR RELIEF
Aiding and Abetting FLiK’s and CoinSpark’s Violations of Sections 5(a), 5(c),
and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and
Rule 10b-5 Thereunder
(Felton)
146. The Commission repeats and realleges  paragraphs 1 through 125 of its
Complaint.
147. By virtue of the foregoing, Defendants FLiK and CoinSpark violated
Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange
Act and Rule 10b-5 thereunder through the unregistered offers and sales  of the
FLiK or SPARK tokens.
148. Defendant Felton, in  the manner set forth above, provided knowing or
reckless substantial assistance to these violations by FLiK and CoinSpark.

50

149. By virtue of the foregoing,  Defendant Felton aided and abetted and,
unless restrained and enjoined, will  continue aiding  and abetting, violations  of
Sections 5(a), 5(c), and 17(a)(1)-(3) of the Securities Act [15 U.S.C. §§ 77e(a),
77e(c), 77q(a)(1)-(3)], Section 10(b) of the Exchange  Act [15 U.S.C. § 78j(b)], and
Rule 10b-5(a)-(c) [17 C.F.R. § 240.10b-5(a)-(c)] promulgated thereunder, in
violation  of Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)].
SEVENTH CLAIM FOR RELIEF
Violations of Section 17(b) of the Securities Act
(White and Smith)
150. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
151. By virtue of the foregoing, Defendants White and Smith  made use of
the means and instruments of transportation or communication in  interstate
commerce or of the mails to publish, give  publicity  to, or circulate  a notice,
circular, advertisement, newspaper, article, letter, investment service, or
communication which, though not purporting to offer a security for sale, describes
such security for a consideration received or to be received, directly or indirectly,
from an issuer, underwriter, or dealer, without fully disclosing  the receipt, whether
past or prospective, of such consideration and the amount thereof.

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152. As  described herein, Defendants White and Smith promoted the
SPARK tokens under false names, without disclosing  that Felton had promised
them full-time  employment  in  connection with CoinSpark, if  CoinSpark raised
sufficient funds.
153. By reason of the conduct described above, Defendants White and
Smith violated and, unless enjoined will  again  violate, Sections 17(b) of the
Securities Act [15 U.S.C. §§ 77q(b)].
EIGHTH CLAIM FOR RELIEF
Unjust Enrichment
(All  Relief Defendants)
154. The Commission realleges  and incorporates by reference paragraphs 1
through 125, as though fully set forth herein.
155. By virtue of the foregoing, in  the manner described above, Relief
Defendants received investor funds and/or ill-gotten  gains  for which  they gave no
bona fide consideration and to which they have no legitimate  claim.
156. As  described herein, the funds acquired by Relief Defendants are
traceable to Felton’s wrongful  acts and were acquired under circumstances in

52

which it is not just, equitable  or conscionable for Relief  Defendants to retain the
funds.
157.  By reason of the conduct described above, Relief  Defendants have
been unjustly enriched and should be required to return their ill-gotten  gains.
 PRAYER FOR RELIEF
WHEREFORE, the Commission respectfully requests that the Court grant
the following  relief:
I.
A    Final Judgment permanently enjoining Defendants from violating
Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e(a), 77e(c)];
A  Final  Judgment permanently enjoining  Defendants FLiK, CoinSpark, and
Felton from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule  10b-5 [17 C.F.R.
§ 240.10b-5] issued thereunder;
A  Final  Judgment permanently enjoining  Defendant Felton from violating
Section 9 [15 U.S.C. § 78i];
A  Final  Judgment permanently enjoining  Defendants White and Smith from
violating Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)];

53

II.
A Final Judgment directing Defendants FLiK, CoinSpark, Felton, and
Sparks, and all Relief  Defendants, to disgorge or return all  ill-gotten  gains or unjust
enrichment derived from the activities  set forth in this Complaint,  including
prejudgment interest thereon;
III.
A Final Judgment permanently barring  Defendant Felton from serving  as an
officer or director of any public  company pursuant to Section 20(e) of the
Securities Act [15 U.S.C. § 77t(e)], and Section 21(d)(2) of the Exchange Act [15
U.S.C. § 78u(d)(2)];
IV.
A Final Judgment prohibiting  Defendants from participating, directly or
indirectly,  in  the issuance, purchase, offer, or sale of any digital  asset security;
V.
A Final Judgment directing  Defendants to pay civil  money penalties
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section
21(d)(3) of the Exchange  Act [15 U.S.C. § 78u(d)(3)]; and
VI.
Such other and further relief  as this Court deems just and appropriate.

54

DEMAND FOR JURY TRIAL
Pursuant to Rule 38 of the Federal Rules of Civil  Procedure, the Commission
demands trial by jury in this action issues so triable.

Dated:  New York, New York
     September 10, 2020

      Respectfully submitted,
       /s/ Richard R. Best
      Richard R. Best
John O. Enright
Richard Hong
David H. Tutor
Attorneys for the Plaintiff
SECURITIES AND EXCHANGE
COMMISSION
200 Vesey Street, Suite 400
New York, New York 10281-1022
(212) 336-0056 (Hong)
[email protected]

       Kristina Littman
Carolyn Welshhans
David A.  Becker
Virginia M. Rosado Desilets
SECURITIES AND EXCHANGE
COMMISSION
100 F Street, N.E.
Washington, DC 20549

COUNSEL FOR PLAINTIFF

IN THE UNITED STATES DISTRICT COURT  
NORTHERN DISTRICT OF GEORGIA 

ATLANTA DIVISION 
 

 
 

COMPLAINT 

Plaintiff Securities and Exchange Commission (the “Commission”), for its 

Complaint against Defendants FLiK, CoinSpark, Ryan S. Felton (“Felton”), 

William Q. Sparks (“Sparks”), Owen B. Smith (“Smith”), Chance B. White 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

                                 v. 

FLIK,   
COINSPARK, 
RYAN S. FELTON, 
WILLIAM Q. SPARKS, JR., 
OWEN B. SMITH, and 
CHANCE B. WHITE, 

Defendants,  

And 

Case No. 
 

JURY TRIAL DEMANDED 

HYPERION HOLDINGS LLC, 
STEPHANIE L. BROWN, 
DALE W. FELTON, and 
JENNIFER FELTON, 
                                              Relief Defendants. 

 

  

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(“White”) (collectively, “Defendants”), and Relief Defendants Hyperion Holdings, 

LLC (“Hyperion Holdings”), Stephanie L. Brown (“Brown”), Dale W. Felton 

(“Dale Felton”), and Jennifer Felton (collectively, “Relief Defendants”), alleges as 

follows: 

SUMMARY 
 

1. Between August 2017 and June 2018, Defendants FLiK, CoinSpark 

and Felton engaged in fraudulent and unregistered offerings of digital asset 

securities, collectively reaping over $3 million in illegal profits from investors.  

Shortly after each entity’s offering concluded, Felton misappropriated the funds 

raised in that offering and then moved on to his next venture.  Despite promising to 

use the funds raised from investors to build the FLiK and CoinSpark online 

platforms, Felton instead used the funds to buy a Ferrari, a million-dollar home, 

diamond jewelry, and other luxury items for himself.  None of the proceeds were 

used for any of the purposes described in the offering materials.  

2. From approximately August 20, 2017 to September 20, 2017, Felton 

and FLiK, a purported video streaming platform promoted by Felton as “Netflix on 

the blockchain,” conducted a so-called “Initial Coin Offering” (“ICO”), through 

which they raised approximately 539 ether (“ETH”), a digital asset worth 

approximately $164,665 as of September 20, 2017, in exchange for FLiK “tokens,” 

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which were digital assets offered as investment contracts, and therefore securities 

(the “FLiK ICO”).  Defendant Sparks worked with Felton on the FLiK ICO and, 

with Felton and others, directly or indirectly offered and sold FLiK tokens through 

the FLiK ICO. 

3. On August 17, 2017, prior to the start of the FLiK ICO, Felton 

transferred 60 million FLiK tokens to an ethereum blockchain address that he 

controlled.  Over the next two months, Felton fraudulently promoted FLiK, 

including by publishing materially false and misleading statements on various 

social media platforms and on the FLiK website.  During this same time period, 

Felton offered and sold FLiK tokens to investors located all over the world and in 

the United States through his account at a digital asset trading platform.  (These 

offers and sales, as well as offers and sales during the FLiK ICO and Felton’s 

subsequent offers and sales of FLiK tokens through June 2018, are referred to 

herein collectively as the “FLiK Offering.”)  Felton made these sales anonymously 

and transferred the proceeds to financial accounts in his own name or under his 

control.  Felton also diverted the proceeds of the FLiK ICO to his own personal 

accounts. 

4. In addition to using the proceeds to purchase a house, cars, jewelry, 

and high-end home furnishings. Felton also transferred portions of the proceeds to 

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the Relief Defendants, Jennifer Felton (his wife), Brown (his sister), and Dale 

Felton (his father).  

5. In October 2017, Felton began working with White and Smith on a 

second offering, this time for a purported digital asset exchange called 

“CoinSpark.”   

6. From February 14 through March 14, 2018, Felton and CoinSpark  

raised approximately 460 ETH (worth approximately $282,418 as of March 14, 

2018) in an unregistered offering of digital assets called “SPARK tokens” 

(“CoinSpark ICO” or “CoinSpark Offering”), which were offered and sold as 

investment contracts, and therefore securities.  Defendants White and Smith 

worked on the CoinSpark ICO and, with Felton and others, directly or indirectly 

offered and sold SPARK tokens in the CoinSpark ICO.   

7. White and Smith promoted the SPARK ICO under false names, 

without disclosing that Felton had promised them full-time employment in 

connection with CoinSpark, if CoinSpark raised sufficient funds. 

8. On March 20, 2018, Felton transferred the ETH raised in the 

CoinSpark ICO to an ethereum blockchain address that he controlled.  Felton 

subsequently transferred the ETH to other blockchain addresses he controlled, and 

converted the ETH to other digital assets and U.S. dollars, before transferring the 

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funds to financial accounts in his own name or under his control, including 

accounts of Relief Defendants Jennifer Felton and Hyperion Holdings.  Felton also 

transferred all unsold SPARK tokens to a blockchain address under his control his 

own personal account, for his personal use. 

9. In early April 2018, Felton engaged in manipulative matched trades 

intended to create the false appearance of trading activity in SPARK tokens in 

order to artificially increase the trading price of SPARK tokens and to induce 

others to purchase SPARK tokens. 

10. In offering and selling FLiK and SPARK tokens, Felton, FLiK, and 

CoinSpark knowingly, recklessly, or negligently made and disseminated numerous 

materially false and misleading statements and engaged in other deceptive acts, 

including manipulative trading by Felton. 

11. The FLiK and CoinSpark Offerings were illegal offerings of securities 

for which no registration statements were filed or in effect, and as to which no 

exemption from registration was available.   

VIOLATIONS 

12. By virtue of the foregoing conduct and as alleged further herein, 

a. Defendants Felton, FLiK, and CoinSpark violated Section 5(a) 

and 5(c) of the Securities Act, and Section 17(a) of the Securities Act of 

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1933 (“Securities Act”) [15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a)], and 

Section 10(b) of the Securities Exchange Act of 1934 ( “Exchange Act”) [15 

U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].   

b. Defendant Felton aided and abetted FLiK’s and CoinSpark’s 

violations of Section 5(a) and 5(c) of the Securities Act, Section 17(a) of the 

Securities Act and Section 10(b) of the Exchange Act, and Rule 10b-5 

thereunder.   

c. Defendants Sparks, White and Smith violated Sections 5(a) and 

5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].   

d. Defendant Felton violated Section 9(a)(1) of the Exchange Act 

[15 U.S.C. §78i(a)].   

e. Defendants White and Smith violated Section 17(b) of the 

Securities Act [15 U.S.C. § 77q(b)]. 

f. Relief Defendants Hyperion Holdings, Brown, Dale Felton, and 

Jennifer Felton received funds from Defendant Felton for which they gave 

no consideration and to which they have no right or legitimate claim. 

g. Defendants, unless restrained and enjoined by this Court, will 

continue to engage in the acts, practices, transactions, and courses of 

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business alleged in this Complaint or in acts, practices, transactions, and 

courses of business of similar type and object. 

NATURE OF THE PROCEEDING AND RELIEF SOUGHT 

13. The Commission brings this action pursuant to the authority conferred 

upon it by Section 20(b) of the Securities Act [15 U.S.C. § 77t(b)] and Sections 

21(d)(1) & (d)(5) of the Exchange Act [15 U.S.C. § 78u(d)(1) & (d)(5)]. 

14. The Commission seeks a final judgment: (a) permanently enjoining 

Defendants from engaging in acts, practices and courses of business alleged herein; 

(b) ordering Felton, FLiK, and CoinSpark, joint and severally, and Sparks 

separately, to disgorge their ill-gotten gains and to pay prejudgment interest 

thereon; (c) prohibiting Felton, pursuant to Section 20(e) of the Securities Act [15 

U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], 

from acting as an officer or director of any public company; (d) imposing civil 

money penalties on Defendants pursuant to Section 20(d) of the Securities Act [15 

U.S.C § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; 

(e) ordering Relief Defendants jointly and severally with Felton, FLiK, and 

CoinSpark to disgorge or return their ill-gotten gains and to pay prejudgment 

interest thereon; (f) prohibiting Defendants from participating, directly or 

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indirectly, in any issuance, purchase, offer, or sale of digital asset securities; and 

(g) ordering any other and further relief the Court may deem just and proper.  

JURISDICTION AND VENUE 

15. This Court has jurisdiction over this action pursuant to Sections 20(b), 

20(d), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)] and 

Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 

and 78aa].  Defendants, directly or indirectly, have made use of the means or 

instruments of transportation or communication in, and the means or 

instrumentalities of, interstate commerce, or of the mails, in connection with the 

transactions, acts, practices, and courses of business alleged herein.   

16. Venue is proper because the transactions, acts, practices, and courses 

of business constituting violations of federal securities laws occurred in the 

Northern District of Georgia.  Defendants Felton, Sparks, Smith, and White all 

reside in the District, and resided in this District at the time of the events alleged 

herein, and Defendants FLiK and CoinSpark have their principal place of business 

in this District.  Relief Defendants Brown and Jennifer Felton reside in this 

District, and Relief Defendant Dale Felton traveled to the District during the time 

of the events alleged herein.  Relief Defendant Hyperion Holdings has its principal 

place of business in this District.   

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DEFENDANTS 

17. Ryan S. Felton, age 46, resides in Atlanta, Georgia.  Felton is the 

founder, sole owner, and sole officer of FLiK, CoinSpark, and Hyperion Holdings, 

which all have their primary place of business in Atlanta, Georgia.   

18. FLiK is an unincorporated entity that had its principal place of 

business in Atlanta, Georgia in 2017-2018. 

19. CoinSpark is an unincorporated entity that had its principal place of 

business in Atlanta, Georgia in 2017-2018. 

20. William Q. Sparks, Jr., 35, is the social media manager for rapper, 

actor, and producer Clifford Joseph Harris, Jr. (“Harris”) and resides in Atlanta, 

Georgia. 

21. Chance B. White, 41, works in the film and film-editing industry and 

resides in Atlanta, Georgia. 

22. Owen B. Smith, 40, works in the film and film-editing industry and 

resides in Atlanta, Georgia.   

RELIEF DEFENDANTS 

23. Jennifer Felton, 46, is the wife of Felton and lives in Atlanta, 

Georgia.  Jennifer Felton received approximately $32,000 in jewelry purchased 

using the proceeds of the FLiK Offering, and approximately $25,000 in checks and 

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transfers and $11,400 in prepaid Bitcoin debit cards using the proceeds of the 

CoinSpark Offering.  Jennifer Felton also received, jointly with Felton, a home, 

cars, furniture, and other luxury goods purchased by Felton with the proceeds of 

the FLiK Offering.  As described below, these proceeds constitute ill-gotten gains 

because Jennifer Felton does not have a legitimate interest in them. 

24. Dale W. Felton, 75, is the father of Felton and lives in Navasota, 

Texas.  Dale Felton received approximately $100,000 from the proceeds of the 

FLiK Offering, which, as described below, constitute ill-gotten gains because Dale 

Felton does not have a legitimate interest in them. 

25. Stephanie L. Brown, 53, is the sister of Felton and lives in 

Cartersville, Georgia.  Brown received approximately $18,500 from the proceeds 

of the FLiK Offering, which, as described below, constitute ill-gotten gains 

because Brown does not have a legitimate interest in them. 

26. Hyperion Holdings, LLC is a limited liability company formed 

under the laws of Georgia, with its principal place of business in Atlanta, Georgia.  

Hyperion Holdings received approximately $124,250 from the proceeds of the 

CoinSpark Offering, which, as described further below, constitute ill-gotten gains 

because Hyperion Holdings does not have a legitimate interest in them. 

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OTHER RELATED INDIVIDUAL 

27. Clifford Joseph Harris, Jr., a.k.a. “T.I.” or “Tip,” 39, is an Atlanta-

based rapper, actor, and producer.   

BACKGROUND ON DIGITAL ASSETS AND ICOS 

28. The term “digital asset” or “digital token” generally refers to an asset 

that is issued and transferred using distributed ledger or blockchain technology, 

including “cryptocurrencies,” “coins,” and “tokens.”1  Entities have offered and 

sold digital assets in fundraising events, called “initial coin offerings” or “ICOs,” 

in exchange for consideration, often other digital assets.  FLiK and CoinSpark each 

offered and sold digital assets as securities through ICOs.   

29. Generally, digital assets may entitle holders to certain rights related to 

a venture underlying the ICO, such as rights to profits, shares of assets, rights to 

use certain services provided by the issuer, and/or voting rights.  These digital 

tokens may also be listed on online digital asset trading platforms, where they can 

be traded for other digital assets or fiat currency.  The digital tokens are often 

transferable immediately upon delivery to investors. 

                                                             
1  A blockchain or distributed ledger is a peer-to-peer database spread across a network, that 
records all transactions in theoretically unchangeable, digitally recorded data packages.  The 
system relies on cryptographic techniques for secure recording of transactions.  Blockchains or 
distributed ledgers can also record “smart contracts,” essentially computer programs designed to 
execute the terms of a contract when certain triggering conditions are met. 

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30. ICOs are typically announced and promoted through public online 

channels.  The prospectus soliciting the public to acquire tokens in the ICO is 

usually in the form of a “white paper,” which constitutes marketing materials 

describing the project and the terms of the ICO.  To participate, investors may 

transfer funds to a unique digital address set up by the issuer, and the issuer may 

deliver tokens to the participants’ unique digital address on a distributed ledger or 

blockchain.  This process may be partially automated through the use of a smart 

contract, as it was for the FLiK and CoinSpark ICOs. 

31. On July 25, 2017, the Commission issued the DAO Report of 

Investigation, advising that digital tokens or coins may be securities, and thus, 

subject to the federal securities laws.  Both the FLiK and CoinSpark ICOs occurred 

after the DAO Report was released. 

FACTS 

I. FLiK 

A. FLiK, Felton, and Sparks Engaged in the Unregistered Offer and 
Sale of Securities through the FLiK Offering. 

Felton Launches the FLiK ICO  

32. Felton was the owner of a small film production studio in Atlanta, 

which focused mainly on filming commercials.  In July 2017, shortly after failing 

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to raise funds for a film project and facing financial obligations, Felton began 

planning the FLiK Offering.   

33. Felton created a FLiK website and various social media accounts and 

prepared a white paper and other marketing materials for the FLiK ICO, which he 

subsequently published on public online channels.   

34. In the white paper, the FLiK website, and through various social 

media accounts, Felton described FLiK as a video-streaming platform that would 

accept FLiK tokens issued in the FLiK ICO as payment for content on the 

platform.  Felton’s offering and promotional materials for the FLiK ICO 

emphasized that FLiK tokens would appreciate in value with time, and highlighted 

the ability to trade them on digital asset trading platforms.  In these materials, as 

well as in social media accounts, Felton also emphasized the potential profits from 

resale of the tokens, encouraging investors to wait until the FLiK token reached a 

sufficiently high resale price before selling. 

35. At the time of the FLiK Offering, the FLiK platform had not been 

built.  Nonetheless, the white paper touted the film and entertainment industry 

experience of Felton and others on the FLiK team, including Harris, a well-known 

Atlanta-based rapper, actor, and producer, that gave them the skill set necessary to 

ensure FLiK’s success.     

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36. The terms of the FLiK white paper and marketing materials further 

provided that the funds raised in the FLiK ICO would be pooled and that a 

significant portion would be used by the FLiK management team to develop 

FLiK’s online distribution platform to allow artists to sell or rent their work; to 

create a video streaming platform; to license content; and to generally market and 

promote the project.   

 The FLiK ICO Solicited Investors Worldwide, Including in the United States 

37. Felton conducted the FLiK ICO from August 20, 2017 through 

September 20, 2017.  During the FLiK ICO, investors could purchase FLiK tokens 

by sending ETH to the FLiK smart contract.  The FLiK website and social media 

accounts, which were hosted or accessible in the United States, solicited potential 

investors from around the world, including in the United States.  

38. Felton paid for Facebook advertisement campaigns to promote the 

FLiK ICO worldwide, including in the United States.  These ad campaigns, which 

ran from at least September 1, 2017 through September 11, 2017, specifically 

targeted male users, ages 18-50, located in the United States, among other places, 

whose interests included “ICO,” “Investment,” and “Investor.”  The “text” of the 

ads, which appeared on these users’ Facebook News Feeds, included “Video 

Streaming Built on the Blockchain. Co-Owned by T.I. [Harris],” which reached 

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over 2,000 users in the United States, including at least 64 users in Georgia, and 

“FLIK ICO – Entertainment Revolution! 10 FLIK for Just .002 ETH!” which 

reached over 4,000 users in the United States, including 96 users in Georgia.  

39. Sparks, a social media manager for Harris, engaged in selling efforts 

for FLiK.  Sparks announced the FLiK ICO, and that Harris was a co-owner of 

FLiK, on Harris’ social media accounts, including Twitter and Facebook.  At the 

time of the FLiK ICO, Harris had more than 7 million followers on Twitter.  The 

announcement of the FLiK ICO that Sparks posted on Harris’s social media 

accounts, and the assertion Sparks made in those posts that Harris was a co-owner 

of FLiK, substantially amplified the reach of FLiK’s marketing campaign for the 

FLiK ICO.  Sparks made at least one post to Harris’s official Twitter and Facebook 

accounts that included the FLiK website address, where investors could purchase 

FLiK tokens during the ICO. 

40. At Felton’s request, Harris also arranged the FLiK ICO to be 

promoted on the Twitter, Instagram, and Facebook accounts of a well-known 

American actor, comedian, and producer (“Celebrity 1”), who, at the time of the 

FLiK ICO, had more than 34 million followers on Twitter.  The announcement of 

the FLiK ICO on Celebrity 1’s social media accounts also substantially amplified 

the reach of FLiK’s marketing campaign for the FLiK ICO. 

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41.  Throughout the FLiK Offering, Felton also anonymously sold 

millions of FLiK tokens to investors through a so-called “decentralized digital 

asset trading platform”2 and through an Australia-based digital asset trading 

platform (the “Australian Trading Platform”), as discussed below.   

42. From September 1 through September 13, 2017, Felton transferred 

more than 11 million FLiK tokens to the “decentralized digital asset trading 

platform” where he began attempting to sell the tokens anonymously to 

unsuspecting investors.   

43. Also in September 2017, Felton arranged to have FLiK tokens listed 

for sale on the Australian Trading Platform.  On the day that the FLiK token, 

which had no restrictions on resale to U.S. investors, was listed for sale on the 

Australian Trading Platform, Felton deposited more than 17.6 million FLiK tokens 

into his account at the Australian Trading Platform.  In total, from October 6, 2017, 

through October 21, 2017, Felton deposited more than 34.7 million FLiK tokens 

into his account at the Australian Trading Platform.   

 

                                                             
2  A “decentralized digital asset trading platform” typically refers to a trading platform 
where smart contracts (i.e. computer code) are utilized to facilitate peer-to-peer trading of digital 
assets.   

 

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FLiK’s Offer and Sale of FLiK Tokens Was an Offering of Securities 

44. Based upon the foregoing, the FLiK tokens offered and sold in the 

FLiK Offering were offered and sold as “investment contracts,” and thus securities, 

within the meaning of Section 2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)] 

and Section 3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)].   

45. No registration statement was ever filed or in effect for the offers and 

sales of FLiK tokens, and no exemption from registration was available for the 

FLiK Offering.  

B. Felton and FLiK Engaged in Deceptive Conduct to Defraud FLiK 
Investors and Made and Disseminated Material 
Misrepresentations to Sell FLiK Tokens. 

46. Felton and FLiK knowingly, recklessly, or negligently engaged in 

deceptive conduct to defraud FLiK investors by, among other acts: 

a) making and disseminating material misstatements to promote 

FLiK tokens during the FLiK Offering; 

b) diverting 60 million FLiK tokens to Felton’s digital asset 

accounts without disclosing this in the FLiK white paper or on the FLiK 

website, and then anonymously selling them FLiK tokens on digital asset 

trading platforms; 

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c) continuing to issue materially false and misleading promotional 

statements to pump up the price and to generate a market to support Felton’s 

dumping of millions of FLiK tokens in sales subsequent to the ICO; and 

d) using the proceeds of the FLiK Offering for Felton’s personal 

use and to purchase luxury goods and gifts rather than for the purposes 

disclosed in the offering materials. 

47. FLiK and Felton raised approximately $250,000 from investors 

through the FLiK ICO and at least $2.2 million more through Felton’s subsequent 

FLiK offers and sales in the FLiK Offering. 

48. Felton, the sole owner of FLiK, personally made all the statements on 

the FLiK website, white paper, social media accounts, including Facebook, 

Instagram, Twitter, bitcointalk.org, and the Telegram Messaging App 

(“Telegram”), and other marketing materials. 

49. Felton made and disseminated numerous material misstatements, all 

of which were to create a false and misleading appearance to investors that FLiK 

and the FLiK Offering were financially viable or successful as well as financially 

rewarding for investors who would be able to acquire a purportedly limited supply 

of FLiK tokens in the FLiK Offering.  These statement appeared on the FLiK 

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website, white paper, social media accounts, and other marketing materials, 

including the examples below. 

50. On August 17, 2017, before the FLiK ICO began, Felton transferred 

60 million FLiK tokens to himself.  He did not disclose the existence of these 

tokens or this transfer in the FLiK white paper or otherwise on the FLiK website or 

social media posts.  This omission was material, as it made other statements about 

FLiK token’s availability for allegedly limited sale and distribution, including the 

statement regarding the purported FLiK token “burn” (removal from circulation) 

that would also occur following the FLiK ICO, in the white paper false or 

misleading.  Felton knew or was reckless in not knowing that his omission of this 

material fact made the other statements in the white paper false or misleading. 

51. In the marketing materials Felton created when the FLiK ICO began, 

Felton claimed that FLiK would be a streaming video platform, and that he was 

finalizing negotiations to license the digital film libraries of several major 

production studios.  The marketing materials claimed that FLiK tokens would be 

used to rent or buy digital content on the FLiK platform. 

52. Felton never incorporated FLiK or formed any business entity for the 

FLiK Offering.  No FLiK streaming platform ever existed.  Felton has admitted 

that he had no discussions with the production studios with which he claimed to be 

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finalizing agreements.  The misstatements that he made were material, and Felton 

knew or was reckless in not knowing that these statements were false when he 

made them. 

53. Also from the beginning of the FLiK Offering, Felton announced on 

the FLiK website and social media accounts that Harris was a co-owner of FLiK.  

In fact, Harris was never a co-owner of FLiK.  These misstatements made by 

Felton were material, and Felton knew or was reckless in not knowing that these 

statements were false when he made them. 

54. On August 20, 2017, the first day of the FLiK ICO, Felton announced 

that “FLiK has another co-owner, but we can’t name him just yet,” and that the 

new co-owner “currently owns a large stake in another video stream platform (one 

you’ve heard of).”  FLiK never had any co-owners; Felton was its only owner. 

Felton knew or was reckless in not knowing that these material statements he made 

were false when he made them. 

55. Within days of launching the FLiK ICO, Felton announced on the 

FLiK website and in an update to the white paper that “the company has secured a 

significant investment through a private placement offering in accordance with the 

Securities & Exchange Commission (SEC) Rule 501 of Regulation D.”  Felton 

knew or was reckless in not knowing that these material statements were false 

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when he made them.  Felton has admitted that he never conducted any private 

offering of FLiK, or provided an equity position to anyone other than himself.  No 

party made any filing with the Commission pursuant to Regulation D with respect 

to FLiK.   

56. Further, Felton made a series of additional material misrepresentations 

about FLiK, including misstatements on August 26 and on September 3, 16, and 

19, 2017, respectively, regarding a purported private investment in FLiK.  

57. On August 26, 2017, Felton announced on the Telegram messaging 

app that FLiK had “a big buyer making a move into FLiK this week . . . buying 

$500,000 worth of tokens.”  This statement was material, as this would have been 

double the full amount raised in the ICO.  Felton knew or was reckless in not 

knowing that this misstatement was false when he made it.  No one purchased 

$500,000 worth of tokens. 

58. On August 26, 2017, Felton announced that “Yesterday, we received 

word that FLiK will be integrated into the new U.S. Military’s set-top box.  This 

means we’ll have access to potentially 2,000,000 customers (1.2M active U.S. 

military and 800,000 reserve U.S. military) as soon as our platform is ready.  This 

is HUGE news!”   Neither the Department of Defense nor the defense contractor 

building the interface for the military’s set-top box had any communications with 

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Felton or any representative of FLiK about integrating FLiK into that interface.  

These misstatements by Felton were material, and Felton knew or was reckless in 

not knowing that these statements were false when he made them. 

59. On September 3, Felton announced on Telegram that the buyer who 

had purportedly purchased $500,000 worth of FLiK tokens actually “didn’t receive 

tokens” but instead “took a small equity position” in FLiK.  He added that the 

investor had a “significant connection . . . at a large movie studio.”  These 

statements were material, and Felton knew or was reckless in not knowing that 

these statements were false when he made them. 

60. On September 3, 2017, Felton announced that Individual A, the 

chairman of a well-known Bitcoin payment-processing company, was handling the 

listing of FLiK tokens on other trading platforms, and had been recruited to “get 

things done” for FLiK, including “talking with [another digital-asset payment-

processing company] about integrating FLiK tokens into their app.”  Felton has 

admitted that Individual A had no involvement with listing FLiK tokens on any 

trading platforms, nor was individual A involved in any communications with the 

other digital-asset payment-processing company about FLiK.  These misstatements 

by Felton were material, and Felton knew these statements were false when he 

made them. 

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61. On or around September 16, Felton announced that FLiK had raised 

“over 450 ETH via the ICO and over $2.2M in private equity capital.”  Felton’s 

statement regarding private equity was material, as $2.2 million in private equity 

would have been almost ten times the amount Felton actually had raised in the 

FLiK ICO.  Felton knew or was reckless in not knowing that this statement was 

false when he made it.  In fact, the Felton sales that occurred after the ICO phase of 

the FLiK Offering netted Felton personally approximately $2.2 million.  Felton 

thus invented the private equity investment to mislead investors regarding his 

transfer of FLiK tokens to himself and his own massive sell-off of FLiK tokens, 

which were visible to investors on the blockchain, but not publicly traceable to 

him.   

62. On September 19, Felton announced that the “private equity” 

investors mentioned three days earlier had “wired funds and we reserved coins for 

them.”  This misstatement was material, and Felton knew or was reckless in not 

knowing that this statement was false when he made it.     

63. Also on September 19, 2017, Felton responded to concerns investors 

raised about the significant volume of FLiK tokens being sold on the 

“decentralized digital asset platform” to which Felton had transferred more than 11 

million FLiK tokens.  In a post on FLiK’s Telegram channel, Felton cast the blame 

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on Harris and promised that Harris would rectify the problem by buying back the 

tokens.  In fact, Felton has admitted that he never had any information about 

personal sales by Harris.  This was yet another attempt by Felton to conceal his 

own massive sales of FLiK tokens to investors at a time when he was misleading 

investors about the success of the venture.  These misstatements were material, and 

Felton knew or was reckless in not knowing that these statements were false when 

he made them. 

64. Also on September 19, 2017, Felton announced that FLiK intended to 

add music streaming to its platform, but needed “to wait for one of our co-owners 

to unwind himself from an ownership position in another major music streaming 

service.”  FLiK never had any co-owners; Felton was its only owner.  This 

misstatement by Felton was material, and Felton knew or was reckless in not 

knowing that this statement was false when he made it.    

65. Once the FLiK token was listed on the Australian Trading Platform, 

Felton immediately began selling massive amounts of his own FLiK tokens to the 

public.  The Australian Trading Platform permitted trading by U.S.-based investors, 

and U.S.-based investors purchased and sold the FLiK token through the 

Australian Trading Platform.  On October 6, 2017, Felton sold more than 770,920 

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FLiK tokens on the Australian Trading Platform, and on October 7, 2017, Felton 

sold another 1.67 million FLiK tokens on the Australian Trading Platform.  

66. On October 8, 2017, Felton referenced Company A, a digital video 

software development company, as FLiK’s “partner” on FLiK’s Telegram channel.  

FLiK never entered into any partnership with Company A, nor any other 

arrangement or agreement with Company A.  This misstatement Felton made was 

material, and Felton knew or was reckless in not knowing that this statement was 

false when he made it. 

67. Also on October 8, 2017, Felton sold more than 3.58 million FLiK 

tokens and on October 9, 2017, Felton sold another 16.7 million FLiK tokens on 

the Australian Trading Platform.  In total, from October 6, 2017 through October 

20, 2017, when the FLiK token’s supply was supposed to become more limited 

through a scheduled “burn” of tokens, Felton increased the supply by selling more 

than 33.91 million of additional FLiK tokens for Bitcoin and ETH on the 

Australian Trading Platform to investors, including some investors located in the 

United States.   

68. On April 3, 2018, Felton posted on the FLiK website that “the OTT 

(over-the-top) video streaming platform FLiK is deploying is ready to go and has 

been tested and proven in real-world production environments.”  FLiK never 

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deployed nor tested any video streaming platform, nor did it have a video 

streaming platform “ready to go.”  These misstatements were material, and Felton 

knew or was reckless in not knowing that these statements were false when he 

made them. 

69. On April 12, 2018, Felton sold an additional 42,000 FLiK tokens on 

the Australian Trading Platform.  On June 6, 2018, Felton sold an additional 

369,533 FLiK tokens.  In total, from October 6, 2017 through June 6, 2018, Felton 

sold more than 34.39 million FLiK tokens for BTC and ETH on the Australian 

Trading Platform to investors, including some investors located in the United 

States.  Felton subsequently transferred the proceeds of these sales to financial 

accounts he controlled.  

70. FLiK and Felton never built a FLiK platform, never licensed content 

to stream on its envisioned platform, and never had any operations or revenue from 

operations.   

71. FLiK token-holders have never been able to use their tokens on a 

FLiK (or any other) platform, which was never created.  There is currently no 

market for FLiK tokens, which have lost essentially all of their value.   

72. Felton obtained approximately $2.5 million in illegal profits from the 

foregoing fraudulent conduct.  

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II. CoinSpark 

A. CoinSpark, Felton, White and Smith Engaged in the Unregistered 
Offer and Sale of Securities through the CoinSpark Offering.  

Felton, White and Smith Launch the CoinSpark ICO  
 
73. Even before the FLiK ICO concluded and while Felton continued to 

conduct the FLiK Offering, Felton began working on his next digital asset 

securities offering.  Frustrated with his inability to get the FLiK token listed on 

more digital asset trading platforms, Felton wanted to build his own digital asset 

trading platform under the name CoinSpark.   

74. Felton registered the CoinSpark website domain in September 2017, 

and, in October 2017, began meeting with White and Smith, independent 

contractors who previously worked with Felton on filming commercials, to plan 

the CoinSpark ICO and the issuance of its token, the SPARK token. 

75. White and Smith prepared marketing materials, including posts for 

social media, “countdowns,” graphics, videos, and other materials for the 

CoinSpark ICO.  Felton reviewed these materials before they were posted.  White 

and Smith also met with Felton to discuss logistics, timing, and how they could 

support the CoinSpark ICO.  They reviewed the CoinSpark ICO white paper, 

drafted by Felton, and provided feedback to Felton, and discussed the details of the 

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offering and its terms, including the planned dividend that CoinSpark would pay to 

all SPARK token-holders, which was disclosed in the white paper. 

76. The white paper provided that SPARK tokens in the CoinSpark ICO 

would be offered and sold in exchange for ETH.  The white paper and other 

promotional materials claimed that it was “inevitable” that SPARK tokens would 

appreciate in value with time, and heavily promoted the CoinSpark “dividend,” 

which would pay out 25% of CoinSpark’s profits quarterly to token-holders.  On 

CoinSpark’s website and in the white paper, Felton also touted the future ability to 

trade SPARK tokens on digital asset trading platforms, including CoinSpark’s 

platform. 

77. The members of the CoinSpark team were not disclosed on the 

CoinSpark website or in the white paper, and Felton never disclosed to investors 

that he was the principal behind the CoinSpark ICO.  Felton nevertheless 

highlighted in the white paper and on CoinSpark’s website CoinSpark 

management’s ability to successfully develop its digital asset trading platform.  

Without disclosing the identities of any of the CoinSpark team members, Felton 

repeatedly touted the CoinSpark team’s “Wall Street” background and “deep roots 

in crypto.”  He also emphasized CoinSpark’s claimed partnerships with established 

organizations. 

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78. The SPARK token’s value depended entirely upon the development of 

the digital asset trading platform by the CoinSpark management.  The CoinSpark 

website and white paper claimed that CoinSpark was actively developing the 

digital asset trading platform, which Felton claimed was almost ready, and in the 

final testing phase. 

The CoinSpark ICO Solicited Investors Worldwide, Including in the United 
States 
 
79. Felton launched the CoinSpark ICO on February 14, 2018, 

announcing that it would run through March 14, 2018.  Before the launch, Felton 

created a CoinSpark website, on which he published a white paper and other 

marketing materials.  Felton also tasked Smith with creating CoinSpark social 

media accounts, and approved the posts Smith made on these accounts.  The 

website and social media accounts, which were hosted or accessible in the United 

States, solicited potential investors from around the world, including in the United 

States.  

80. Felton paid for a Facebook advertising campaign promoting 

CoinSpark, which ran from December 22, 2017 through January 19, 2018, and 

which specifically targeted, and reached, users in the United States.  The ad 

campaign targeted male users, ages 18-45, located in the United States, among 

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other places, whose interests included Bitcoin, cryptocurrency, Ripple, Ethereum, 

or Coinbase.   

81. Felton also offered to send a purported private-placement 

memorandum to any U.S. investors who might be interested in participating in the 

ICO, and told one U.S. investor who resides in this District and invested in the 

CoinSpark ICO that the CoinSpark ICO was “accidentally letting US investors slip 

through the door right now.”  Felton sent this U.S. investor a link to the CoinSpark 

ICO website, in case “you know anyone that wants to jump on it.”  At least one 

non-accredited U.S. investor located in the Northern District of Georgia invested in 

the CoinSpark ICO.  

White and Smith Promoted the CoinSpark ICO and the SPARK Tokens 
 
82. In addition to running the official CoinSpark social media accounts, 

Smith set up a Twitter account under the name Greg Ira, which he used to promote 

the ICO.  Greg Ira purported to be a financial journalist with no connection to 

CoinSpark.  The Greg Ira Twitter account never disclosed any connection to 

CoinSpark, and did not disclose that Felton had promised Smith full-time 

employment with CoinSpark, at a rate of approximately $60,000 per year, if 

CoinSpark raised sufficient funds.  In early 2018, the Greg Ira account retweeted 

CoinSpark promotional material, expressed excitement for the CoinSpark ICO, and 

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tweeted a link to an article that Smith had written under the name Greg Ira, 

promoting the CoinSpark ICO. 

83. Smith also moderated the CoinSpark Telegram forum, and posted 

there under both the official CoinSpark Telegram accounts and a false name, 

“Walter.”  Using the “Walter” account, Smith made posts in February 2018 

promoting the CoinSpark ICO and in July 2018 encouraging SPARK token-

holders to hold onto their tokens rather than taking advantage of the refund 

CoinSpark was offering.  “Walter” never disclosed any affiliation with CoinSpark 

other than as an investor, and did not disclose that Felton had promised Smith full-

time employment, if CoinSpark raised sufficient funds. 

84. In addition to creating, reviewing, and providing feedback on content 

for the official CoinSpark social media accounts, in July 2018 White published a 

promotional article under the pseudonym “CryptoCletus.”  In this article, White 

discussed the value of the SPARK token.  He did not disclose his affiliation with 

CoinSpark, nor did he disclose that Felton had promised him full-time employment 

with CoinSpark, if CoinSpark raised sufficient funds. 

CoinSpark’s Offer and Sale of SPARK Tokens Was an Offering of Securities 
 
85. The SPARK tokens offered and sold in the CoinSpark Offering were 

offered and sold as “investment contracts” and thus securities within the meaning 

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of Section 2(a)(1) of the Securities Act [15 U.S.C. § 77b(a)(1)] and Section 

3(a)(10) of the Exchange Act [15 U.S.C. § 78c(a)(10)]. 

86. No registration statement was ever filed or in effect for CoinSpark 

Offering, and no exemption from registration was available for that offering. 

B. Felton and CoinSpark Engaged in Deceptive Conduct to Defraud 
CoinSpark Investors and Made and Disseminated Material 
Misrepresentations to Sell SPARK Tokens. 

87. Felton and CoinSpark knowingly, recklessly, or negligently engaged 

in deceptive conduct to defraud CoinSpark investors by, among other acts: 

a)  making and disseminating material misstatements to promote  

SPARK tokens during the CoinSpark ICO; 

b) diverting 24 million unsold SPARK tokens to Felton’s own 

digital asset accounts for subsequent sale by Felton; 

c) continuing to issue false promotional statements to pump up the 

price of SPARK tokens and to generate a market to support Felton’s sales of 

the SPARK tokens he had diverted to his own account; 

d) engaging in unlawful matched trades to create a false 

appearance of trading activity and to artificially increase the trading price of 

SPARK tokens; and 

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e) using the proceeds of the CoinSpark Offering for Felton’s 

personal use rather than for the purposes disclosed in the offering materials. 

88. Felton, the sole owner of CoinSpark, personally made the statements 

on the CoinSpark website and in its white paper.  Felton made statements, and 

approved the statements made by Smith, on the CoinSpark social media accounts, 

such as Telegram. 

89. Felton made and disseminated numerous material misstatements, all 

of which were to create a false and misleading appearance to investors that 

CoinSpark and the CoinSpark ICO were financially viable or successful.  These 

statements appeared in the CoinSpark website, white paper, social media accounts, 

and other marketing materials, including the examples below. 

90. In the CoinSpark website, white paper, and other offering materials 

created and disseminated by Felton, he claimed that he was building an 

“international digital asset exchange.”  Felton initially promised a June 1, 2018 

launch date for the exchange; but from February 5 through April 20, 2018, he 

claimed the exchange was on track to launch even earlier, by April 30, 2018.  

Felton claimed that the CoinSpark exchange would offer a trading platform for a 

number of digital assets, including SPARK tokens, and that SPARK token-holders 

could use their SPARK tokens to pay trading fees, which would be discounted to 

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those paying in SPARK tokens.  Felton claimed that SPARK tokens would entitle 

token-holders to receive a quarterly dividend of twenty-five percent of 

CoinSpark’s quarterly net profits. 

91. The CoinSpark trading platform was never fully operational, and as 

Felton used virtually all of the funds raised in the CoinSpark Offering for his own 

personal use, CoinSpark never turned a profit, and no dividend was ever paid to 

token-holders. 

92. Felton posted a fake “review” of CoinSpark’s ICO to an online 

publishing platform on January 20, 2018, using the name of an individual who had 

actually reviewed other ICOs (“Individual 2”).  This fake review positively 

assessed the CoinSpark ICO and the likelihood of a substantial return on the 

investment; purported to speculate about the millions (or tens of millions) of 

dollars that had already been invested by the team in building the exchange; 

posited “rumors” that  “the CoinSpark team consists of former and current Wall 

Street traders and hedge fund players who have been involved with cryptocurrency 

for the past  5+ years”; and concluded that “I am certainly going to partake in the 

ICO and I hope you will consider it as well.”  The article was also cross-posted on 

another website on or around January 24, 2018. 

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93. These misstatements were material, and were false and misleading.  

Felton did not “partake in the ICO.”  He also did not disclose that he was the sole 

owner of CoinSpark.  He used a false name to appear disinterested and to lend 

credibility to his review of his own ICO.  Felton knew or was reckless in not 

knowing that at the time that he disseminated this article that it was false and 

misleading, and that readers would be misled by, among other things, his failure to 

disclose his ownership of CoinSpark. 

94. By at least February 7, 2018, Felton stated on the CoinSpark website 

that CoinSpark had retained a well-known public-company auditing firm (“Audit 

Firm”), to “provide world-class external assurance services to verify our 

accounting and subsequent dividend payments.”  Felton further claimed that 

“[Audit Firm] will perform an external audit (also known as Assurance Services) 

of the CoinSpark financials twice per year to ensure that our financials are in 

accordance with FASB (Financial Accounting Standards Board) IASB 

(International Accounting Standards Board) and U.S. GAAP (United States 

Generally Accepted Accounting Principles).”  These misstatements were material, 

and Felton knew or was reckless in not knowing that these statements were false at 

the time that he made them. 

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95. CoinSpark never retained Audit Firm, and Audit Firm never agreed to 

provide the services described by Felton.  Audit Firm does not offer the services 

described by Felton.   

96. On or around February 7, 2018, Felton, or someone else acting at his 

direction, posted on Telegram that CoinSpark was “working with the Cayman 

government to become the first officially licensed crypto exchange in the country.”  

CoinSpark had no such discussions with the government of the Cayman Islands.  

These misstatements by Felton were material, and Felton knew or was reckless in 

not knowing that this statement was false at the time that he made it. 

97. On or around February 7, 2018, Felton, or someone else acting at his 

direction, stated in a Telegram post that “U.S. investors must be accredited to 

purchase SPARK.  CoinSpark follows SEC regulations when US buyers are 

involved.”  In fact, Felton permitted non-accredited U.S. investors to purchase 

SPARK in the CoinSpark ICO and did not follow SEC Regulations with respect to 

U.S. investors.  These statements by Felton was material, and Felton knew or was 

reckless in not knowing that at the time that he made these statements that 

CoinSpark did not follow SEC Regulations with respect to U.S. investors and did 

not require that U.S. investors be accredited to purchase SPARK. 

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98. On February 10, 2018, Felton, or another person acting at Felton’s 

direction, claimed on Telegram that “millions of dollars have already been 

invested” in CoinSpark “to get things moving and guarantee that the exchange will 

be developed and launched in April.”  Millions of dollars had not, and were not 

ever, invested in CoinSpark; also, the exchange was not developed or launched in 

April 2018.  These misstatements were material, and Felton knew or was reckless 

in not knowing that these statements were false or misleading when he made them. 

99. On the CoinSpark website and in various offering and promotional 

materials, as well as on Telegram, Felton claimed, directly or indirectly, that 

“CoinSpark is run by a team of cryptocurrency experts.”  Felton has admitted that 

no member of the CoinSpark team was a “cryptocurrency expert.”  This 

misstatement by Felton was material, and Felton knew or was reckless in not 

knowing that when he made this statement that it was false. 

100. While CoinSpark and Felton arranged for a basic trading platform to 

be programmed, it was never fully launched.  Felton abandoned CoinSpark by 

September 2018, in favor of new ventures, leaving both the company and the token 

defunct.  The secondary market for SPARK tokens never developed, and very few 

of the original investors were ever able to sell their tokens, which have lost 

essentially all of their value. 

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101.  The CoinSpark Offering raised approximately 460 ETH from 

investors, which Felton transferred (after the CoinSpark ICO ended) to a wallet 

address he controlled.   

102. Felton profited from the foregoing fraudulent conduct, diverting to 

himself approximately $282,418 in illegal proceeds raised from investors. 

Felton Engaged in Manipulative Trading of SPARK Tokens 

103. After the conclusion of the CoinSpark ICO, Felton engaged in 

manipulative trading techniques such as wash and matched trading in an attempt to 

artificially inflate the price of SPARK tokens. 

104. “Matched trades” occur when a person, for the purpose of creating a 

false or misleading appearance of active trading in a security, enters an order to 

buy or sell that security with the knowledge that a substantially similar order has 

been or will be placed to trade the security. 

105. “Wash trades” occur when a security is traded between two accounts 

with no change in beneficial ownership for the purpose of creating a false or 

misleading appearance of active trading in the security. 

106. On March 21, 2018, Felton transferred the remaining approximately 

24 million unsold SPARK tokens to an ethereum address he controlled for his own 

personal use.  Once SPARK tokens began trading on a “decentralized digital asset 

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trading platform,” Felton transferred small amounts of SPARK tokens to another 

individual, for use in matched trades on a decentralized trading platform.  Felton 

also transferred hundreds of thousands of SPARK tokens to other ethereum 

addresses he controlled for that same purpose.  

107. On March 30, Felton suggested to others that they “conference 

tonight” to “[s]ee how we make it go up 20% quickly.”  From March 30 through 

April 3, 2018, Felton and others discussed via text messages Felton’s plan to 

engage in manipulative trading to increase the price of SPARK tokens, including a 

plan to “buy back and forth to get things going at a good rate.”  Felton proposed 

that they trade amongst themselves on the platform to create the false appearance 

of activity and to create a “floor” for the trading price of SPARK tokens.   

108. During and following these text messages, Felton engaged in 

manipulative trading of SPARK tokens.  In at least eight transactions on April 2, 

2018, Felton engaged in matched trades on the decentralized trading platform.  On 

April 12, 2018, Felton also engaged in wash trades between two different ethereum 

addresses that he controlled.   

109. Felton engaged in this trading activity to enable him to sell the 24 

million SPARK tokens that he had misappropriated following the ICO.  

Nonetheless, he was unable to sell a significant volume of SPARK tokens. 

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110. Felton also attempted to list the SPARK token on the Australian 

Trading Platform as he had with the FLiK token, but neither the Australian Trading 

Platform nor any other digital asset trading platform listed the SPARK token, and 

Felton was unable to sell any of his more than 24 million SPARK tokens on the 

Australian Trading Platform or any other digital asset trading platform.  

III. The Relief Defendants Received Ill-Gotten Gains. 

A. Jennifer Felton 

111. In November 2017, shortly after the FLiK Offering, Felton used the 

proceeds of the FLiK Offering to purchase a new home, which cost more than $1 

million.  In October 2017, Felton transferred $2.2 million from his digital asset 

account to his checking account, and used these funds to purchase a home with his 

wife, Jennifer Felton.  He used additional funds from the proceeds of the FLiK 

Offering to purchase a Ferrari, a Chevy Tahoe, furniture, and other luxury goods, 

which he shared with Jennifer Felton. 

112. In December 2017, Felton used proceeds of the FLiK Offering to 

purchase approximately $32,000 in jewelry, including a diamond ring and diamond 

earrings, which he gave to Jennifer Felton that month. 

113. On March 15, 2019, Felton transferred $20,000 from his Hyperion 

Holdings account to Jennifer Felton.  All of the funds in the Hyperion Holdings 

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account appear to have originated from the proceeds of the FLiK and CoinSpark 

Offerings.   

114. In addition to the March 15, 2019 transfer to Jennifer Felton, Felton 

transferred $11,500 in CoinSpark proceeds from the Hyperion Holdings account to 

Felton’s checking account on November 23 and December 6, 2018.  On January 

14, 2019, Felton wrote a check for $5,000 from his checking account to Jennifer 

Felton.   

115. Finally, between January 7 and March 19, 2019, Felton also 

transferred approximately $11,400 in Bitcoin prepaid debit cards to Jennifer 

Felton.  Those Bitcoin prepaid debit cards were loaded with funds from the 

proceeds of the CoinSpark Offering, which Felton had commingled with his 

proceeds from the FLiK Offering. 

116. Jennifer Felton did not have a legitimate claim to the home, cars, 

furniture, or other luxury goods that Felton purchased with the proceeds of the 

FLiK Offering; nor did she have a legitimate claim to the jewelry that Felton 

purchased for her with the proceeds of the FLiK Offering.  Jennifer Felton also did 

not have a legitimate claim to the funds Felton transferred to her from the 

CoinSpark Offering.   

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117. Jennifer Felton’s receipt of a home, cars, furniture, other luxury 

goods, jewelry, and $36,400 in transfers from Felton, from the proceeds of the 

FLiK Offering and CoinSpark Offering, constitute ill-gotten gains derived from 

FLiK, CoinSpark, and Felton’s violations alleged in this Complaint. 

B. Dale Felton 

118. On December 6, 2017, Felton wired $100,000 in proceeds from the 

FLiK Offering to his father, Dale Felton.  Dale Felton did not have a legitimate 

claim to these funds, and described them to the staff of the Commission as a loan 

from Felton that Dale Felton never repaid.   

119. The $100,000 received by Dale Felton from the proceeds of the FLiK 

Offering constitutes ill-gotten gains derived from FLiK and Felton’s violations 

alleged in this Complaint. 

C. Stephanie Brown 

120. On or around February 1, 2018, Felton used the proceeds of the FLiK 

Offering to make a gift of $18,500 to his sister, Brown.  Brown had no legitimate 

claim to these funds, and the gift letter signed by Felton states that the funds are “a 

bona fide gift.”   

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121. The $18,500 received by Brown from the proceeds of the FLiK 

Offering constitutes ill-gotten gains derived from FLiK and Felton’s violations 

alleged in this Complaint. 

D. Hyperion Holdings 

122. Felton diverted the proceeds from the CoinSpark Offering to accounts 

that he controlled at various digital asset trading platforms.  He converted the funds 

into Bitcoin, commingled these funds with proceeds from the FLiK Offering, and 

transferred the funds to other accounts that he controlled.   

123. From one of these accounts, Felton purchased a number of prepaid 

Bitcoin debit cards, and then transferred approximately $11,400 worth of these 

cards to Jennifer Felton, as discussed in paragraph 115.  Using a payment 

processing account Felton set up for Hyperion Holdings to enable him to accept 

payment in such cards, he cashed out the remaining prepaid Bitcoin cards for 

$124,250 in deposits into the Hyperion Holdings checking account, which Felton 

controlled.  Felton also arranged for a deposit of $2,660 into the Hyperion 

Holdings account on May 11, 2018.   

124. Hyperion Holdings had no legitimate claim to these funds, as it had no 

operations and was merely an alter-ego for Felton.  Felton used the Hyperion 

Holdings bank account to pay for his personal expenses, including meals, 

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payments to his criminal defense attorney, and transfers to his personal checking 

account.   

125. The approximately $127,000 received by Hyperion Holdings from the 

proceeds of the FLiK and CoinSpark Offerings constitutes ill-gotten gains derived 

from FLiK, CoinSpark, and Felton’s violations alleged in this Complaint. 

 
FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a)-(c) 
(FLiK, CoinSpark, and Felton) 

126. The Commission repeats and realleges paragraphs 1 through 125 of its 

Complaint. 

127. By virtue of the foregoing, Defendants FLiK, CoinSpark, and Felton, 

directly or indirectly, by the use of the means and instrumentalities of interstate 

commerce or of the mails, in connection with the purchase or sale of securities, 

knowingly or recklessly, employed devices, schemes, or artifices to defraud, made 

untrue statements of material fact and omitted to state material facts necessary in 

order to make the statements made, in light of the circumstances under which they 

were made, not misleading, and engaged in acts, practices, and courses of business 

which operate or would operate as a fraud or deceit. 

128. As described herein, FLiK, CoinSpark, and Felton knowingly or 

recklessly engaged in schemes and deceptive conduct to defraud the FLiK and 

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CoinSpark investors and made and disseminated material misstatements in FLiK’s 

and CoinSpark’s white papers and other marketing materials to sell the FLiK and 

SPARK tokens during the FLiK and CoinSpark Offerings.   

129. By virtue of the foregoing, Defendants FLiK, CoinSpark, and Felton 

violated, and unless restrained and enjoined will continue to violate, Section 10(b) 

of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5(a)-(c) [17 C.F.R. § 

240.10b-5(a)-(c)], promulgated thereunder. 

SECOND CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)(1) 

(FLiK, CoinSpark, and Felton) 
 

130. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

131. By virtue of the foregoing, in the offer or sale of securities, by the use 

of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, directly or indirectly, Defendants FLiK, 

CoinSpark, and Felton knowingly or recklessly employed devices, schemes or 

artifices to defraud. 

132. As described herein, FLiK, CoinSpark, and Felton knowingly or 

recklessly engaged in schemes to defraud the FLiK and CoinSpark investors and 

made and disseminated material misstatements in FLiK’s and CoinSpark’s white 

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46 
 

papers and other marketing materials to offer and sell the FLiK and SPARK tokens 

during the FLiK and CoinSpark Offerings. 

133. By reason of the conduct described above, Defendants FLiK, 

CoinSpark, and Felton, directly or indirectly violated and, unless enjoined will 

again violate, Securities Act Section 17(a)(1) [15 U.S.C. § 77q(a)(1)]. 

THIRD CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)(2) and (3) 

(FLiK, CoinSpark, and Felton) 
 

134. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

135. By virtue of the foregoing, in the offer or sale of securities, by the use 

of the means or instruments of transportation or communication in interstate 

commerce or by use of the mails, directly or indirectly, Defendants FLiK, 

CoinSpark, and Felton negligently obtained money or property by means of an 

untrue statement of a material fact or omitted to state a material fact necessary in 

order to make the statements made, in light of the circumstances under which they 

were made, not misleading; and/or engaged in transactions, practices or courses of 

business which operate or would operate as a fraud or deceit upon the purchaser. 

136. As described herein, FLiK, CoinSpark, and Felton negligently made 

and disseminated material misstatements in FLiK’s and CoinSpark’s white papers 

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and other marketing materials in the offer and sell the FLiK and SPARK tokens 

during the FLiK and CoinSpark Offerings and engaged in transactions, practices or 

course of business to defraud the FLiK and CoinSpark investors. 

137. By reason of the conduct described above, Defendants FLiK, 

CoinSpark, and Felton, directly or indirectly violated and, unless enjoined will 

again violate, Securities Act Section 17(a)(2) and (3) [15 U.S.C. § 77q(a)(2), (3)]. 

FOURTH CLAIM FOR RELIEF 
Violations of Exchange Section 9(a)(1) 

(Felton) 
 

138. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

139. By virtue of the foregoing, Defendant Felton directly or indirectly, by 

use of the mails or any means or instrumentality of interstate commerce, for the 

purpose of creating a false or misleading appearance of active trading in any 

security other than a government security, or a false or misleading appearance with 

respect to the market for any such security (A) effected transactions in a security 

which involved no change in the beneficial ownership thereof; or (B) entered an 

order or orders for the purchase of the security with the knowledge that an order or 

orders of substantially the same size, at substantially the same price, for the sale of 

the security had been or would be entered by or for the same or different parties; or 

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(C) entered any order or orders for the sale of the security with the knowledge that 

an order or orders of substantially the same size, at substantially the same price, for 

the purchase of the security had been or would be entered by or for the same or 

different parties. 

140. As described herein, Felton knowingly or recklessly engaged in 

unlawful matched trades to create a false appearance of trading activity and to 

artificially increase the trading price of SPARK tokens. 

141. By reason of the conduct described above, Defendant Felton directly 

or indirectly violated and, unless enjoined will again violate, Section 9(a)(1) of the 

Exchange Act [15 U.S.C. § 78i(a)]. 

FIFTH CLAIM FOR RELIEF 
Violations of Sections 5(a) and 5(c) of the Securities Act 

(All Defendants) 

142. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

143. As described herein, Defendants FLiK, Felton and Sparks, directly or 

indirectly, offered and sold via Internet digital asset securities, the FLiK tokens, in 

the FLiK Offering.  No registration statement was ever filed or in effect for the 

offers and sales of the FLiK tokens.   

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144. As described herein, Defendants CoinSpark, Felton, Smith and White, 

directly or indirectly, offered and sold via Internet unregistered digital asset 

securities, the SPARK tokens, in the CoinSpark Offering.  No registration 

statement was ever filed or in effect for the offers and sales of the SPARK tokens.  

145. By reason of the conduct described above, Defendants, directly or 

indirectly violated and, unless enjoined will again violate, Securities Act Sections 

5(a) and 5(c) [15 U.S.C. §§ 77e(a) and e(c)]. 

SIXTH CLAIM FOR RELIEF 
Aiding and Abetting FLiK’s and CoinSpark’s Violations of Sections 5(a), 5(c), 

and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and 
Rule 10b-5 Thereunder 

(Felton)   

146. The Commission repeats and realleges paragraphs 1 through 125 of its 

Complaint.   

147. By virtue of the foregoing, Defendants FLiK and CoinSpark violated 

Sections 5(a), 5(c) and 17(a) of the Securities Act, Section 10(b) of the Exchange 

Act and Rule 10b-5 thereunder through the unregistered offers and sales of the 

FLiK or SPARK tokens.    

148. Defendant Felton, in the manner set forth above, provided knowing or 

reckless substantial assistance to these violations by FLiK and CoinSpark. 

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149. By virtue of the foregoing, Defendant Felton aided and abetted and, 

unless restrained and enjoined, will continue aiding and abetting, violations of 

Sections 5(a), 5(c), and 17(a)(1)-(3) of the Securities Act [15 U.S.C. §§ 77e(a), 

77e(c), 77q(a)(1)-(3)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and 

Rule 10b-5(a)-(c) [17 C.F.R. § 240.10b-5(a)-(c)] promulgated thereunder, in 

violation of Section 20(e) of the Exchange Act [15 U.S.C. § 78t(e)]. 

SEVENTH CLAIM FOR RELIEF 
Violations of Section 17(b) of the Securities Act 

(White and Smith) 

150. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

151. By virtue of the foregoing, Defendants White and Smith made use of 

the means and instruments of transportation or communication in interstate 

commerce or of the mails to publish, give publicity to, or circulate  a notice, 

circular, advertisement, newspaper, article, letter, investment service, or 

communication which, though not purporting to offer a security for sale, describes 

such security for a consideration received or to be received, directly or indirectly, 

from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether 

past or prospective, of such consideration and the amount thereof. 

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152. As described herein, Defendants White and Smith promoted the 

SPARK tokens under false names, without disclosing that Felton had promised 

them full-time employment in connection with CoinSpark, if CoinSpark raised 

sufficient funds. 

153. By reason of the conduct described above, Defendants White and 

Smith violated and, unless enjoined will again violate, Sections 17(b) of the 

Securities Act [15 U.S.C. §§ 77q(b)]. 

EIGHTH CLAIM FOR RELIEF 
Unjust Enrichment 
(All Relief Defendants) 

154. The Commission realleges and incorporates by reference paragraphs 1 

through 125, as though fully set forth herein. 

155. By virtue of the foregoing, in the manner described above, Relief 

Defendants received investor funds and/or ill-gotten gains for which they gave no 

bona fide consideration and to which they have no legitimate claim. 

156. As described herein, the funds acquired by Relief Defendants are 

traceable to Felton’s wrongful acts and were acquired under circumstances in 

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which it is not just, equitable or conscionable for Relief Defendants to retain the 

funds. 

157.  By reason of the conduct described above, Relief Defendants have 

been unjustly enriched and should be required to return their ill-gotten gains. 

 PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court grant 

the following relief:  

I. 

A Final Judgment permanently enjoining Defendants from violating 

Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. § 77e(a), 77e(c)]; 

A Final Judgment permanently enjoining Defendants FLiK, CoinSpark, and 

Felton from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 [17 C.F.R. 

§ 240.10b-5] issued thereunder; 

A Final Judgment permanently enjoining Defendant Felton from violating 

Section 9 [15 U.S.C. § 78i]; 

A Final Judgment permanently enjoining Defendants White and Smith from 

violating Section 17(b) of the Securities Act [15 U.S.C. § 77q(b)]; 

 

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53 
 

II. 

A Final Judgment directing Defendants FLiK, CoinSpark, Felton, and 

Sparks, and all Relief Defendants, to disgorge or return all ill-gotten gains or unjust 

enrichment derived from the activities set forth in this Complaint, including 

prejudgment interest thereon; 

III. 

A Final Judgment permanently barring Defendant Felton from serving as an 

officer or director of any public company pursuant to Section 20(e) of the 

Securities Act [15 U.S.C. § 77t(e)], and Section 21(d)(2) of the Exchange Act [15 

U.S.C. § 78u(d)(2)]; 

IV. 

A Final Judgment prohibiting Defendants from participating, directly or 

indirectly, in the issuance, purchase, offer, or sale of any digital asset security;  

V. 

A Final Judgment directing Defendants to pay civil money penalties 

pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)], and Section 

21(d)(3) of the Exchange Act [15 U.S.C. § 78u(d)(3)]; and 

VI. 

Such other and further relief as this Court deems just and appropriate. 

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DEMAND FOR JURY TRIAL  

Pursuant to Rule 38 of the Federal Rules of Civil Procedure, the Commission 

demands trial by jury in this action issues so triable.    

  

Dated:  New York, New York 
    September 10, 2020 
 

      Respectfully submitted,  

       /s/ Richard R. Best 
      Richard R. Best 

John O. Enright 
Richard Hong 
David H. Tutor 
Attorneys for the Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 
200 Vesey Street, Suite 400 
New York, New York 10281-1022 
(212) 336-0056 (Hong) 
[email protected] 
  

       Kristina Littman 
Carolyn Welshhans 
David A. Becker 
Virginia M. Rosado Desilets 
SECURITIES AND EXCHANGE 
COMMISSION 
100 F Street, N.E. 
Washington, DC 20549 
 
COUNSEL FOR PLAINTIFF 
 

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	14. The Commission seeks a final judgment: (a) permanently enjoining Defendants from engaging in acts, practices and courses of business alleged herein; (b) ordering Felton, FLiK, and CoinSpark, joint and severally, and Sparks separately, to disgorge ...