The U.S. District Court for the Western District of Texas granted partial summary judgment in favor of the SEC against crypto influencer Ian Balina.

The court determined that Balina offered and sold SPRK Tokens as securities in unregistered transactions, affirming that U.S. securities laws apply to his activities.

The SEC’s complaint, filed on Sept. 19, 2022, alleged that Balina purchased $5 million worth of SPRK tokens from Sparkster, Ltd. in May 2018. He then allegedly created an investment pool with about 68 individuals, offering and selling SPRK tokens without registering the offering with the SEC as required by federal securities laws.

The SEC also claimed that Balina promoted SPRK tokens on YouTube, Telegram, and other social media platforms from May to July 2018 without disclosing a 30 percent bonus provided by Sparkster as compensation for his promotional efforts.

The SEC charged Balina with violating the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 17(b) for failing to disclose consideration received for his promotions.

The regulator sought partial summary judgment on the unregistered offering violation and a ruling that SPRK Tokens were offered and sold as securities.

In addition, the SEC issued a cease-and-desist order against Sparkster Ltd. and its CEO, Sajjad Daya. The company contributed over $35 million to a fund for harmed investors and paid various fees and penalties.

Promotion charges remain

The SEC also alleged that Balina promoted SPRK tokens on YouTube, Telegram, and social media between May and July 2018, failing to disclose that Sparkster Ltd. offered him a 30% bonus on his token purchases in exchange for his promotions.

The promotional charges fall under Section 17(b) of the Securities Act.

Balina moved for summary judgment on both SEC claims, but the court denied his requests and did not rule on Section 17(b) claims as a matter of law, leaving the promotional charges unresolved.