A Texas district court ruled on Wednesday that crypto investor and YouTuber Ian Balina violated U.S. securities laws when he offered and sold SPRK tokens. The court determined that the SPRK tokens met the criteria of the Howey Test, a 1946 U.S. Supreme Court decision used by the SEC to identify investment contracts as securities.

"The Court holds as a matter of law that U.S. securities laws apply to Balina’s conduct and that the SPRK tokens are securities," the judge stated.

Balina was charged by the SEC in September 2022 for his role in promoting an unregistered initial coin offering (ICO) for Sparkster, a platform marketed as a "no-code" development solution. Despite agreeing to discontinue the sale of its remaining tokens in 2022, Sparkster neither admitted nor denied the SEC's findings.

The SEC's complaint detailed that Balina purchased $5 million worth of SPRK tokens and actively promoted them across YouTube, Telegram, and other social media channels. Furthermore, the agency accused Balina of failing to disclose a 30% bonus on the tokens he bought, which was provided as compensation for his promotional efforts. Additionally, Balina allegedly organized an investment pool comprising approximately 68 individuals to whom he offered and sold SPRK tokens. According to the SEC, Balina should have registered this offering.

Balina has yet to respond to the ruling. However, in a previous statement on his website, he described the SEC's charges as "an unfounded effort based upon multiple misconceptions of fact and law."

This ruling underscores the SEC's stringent stance on unregistered securities offerings in the cryptocurrency space, reiterating the importance of compliance with established securities laws.