Rapper T.I. and his business partner are being sued for securities fraud by several individuals that had invested in their cryptocurrency. The “Live Your Life” rapper – whose real name is Clifford Harris Jr. – and Ryan Felton are being accused of running a standard “pump and dump” scheme, a type of financial fraud in which a stock’s price is inflated through false and misleading statements.
Investors are claiming that they put more than $1 million into what they now call “worthless security” tokens known as FLiK Tokens. They say that T.I. and Felton used celebrity endorsements, social media and industry experts to build on the idea that FLiK was a valid and liquid investment.
Those who purchased the coin are claiming T.I. used comedian Kevin Hart of “Get Hard” and “Night School” fame to be the face of the new coin and to come aboard as a potential business owner, while Felton allegedly created fake online posts on behalf of figures like Mark Cuban to manipulate the price of the tokens.
Investors are saying that once the price shot up, Felton and T.I. sold their coins and disappeared during the latter half of 2017, ultimately causing the tokens to drop.
In a statement, they allege:
“Felton explained that the devaluation was caused, at least in part, because T.I. had given FLiK tokens to members of his family and friends who had sold massive amounts on coinexchange.com, which caused rapid devaluation.”
By the time investors knew what was going on, Felton had reportedly built an entirely new company that had acquired FLiK. Both he and T.I. are now being sued for fraud, and investors are seeking up to $5 million in damages.
This is not the first case of its kind. Roughly two weeks ago, record producer DJ Khaled and professional boxer Floyd Mayweather Jr. found themselves the subject of a lawsuit by investors who had put their money in Centra Tech, a technology firm that is being accused of stealing millions of dollars from individuals through an illegal cryptocurrency scam.
Both men are being sued for serving as celebrity endorsers of the firm. In an online tweet, Mayweather even referred to himself as “Floyd Crypto Mayweather,” while in an Instagram post, Khaled referred to Centra Tech as a “game changer.”
The Securities and Exchange Commission (SEC) is alleging that the company operated illegally and listed fake executives in its employee registry.
Centra Tech’s founders were arrested last April, which caused the firm’s currency to fall to less than two cents. It had been trading for more than $1 in February.