A group of angry investors filed a federal securities fraud lawsuit against T.I. and his purported business partner Ryan Felton.
In August of last year, Tip and Felton launched their cryptocurrency company FLiK Token and offered investors to buy in at 6 cents per coin. Felton said the value would swell to $14.99 in just 15 months, but that wasn’t the case at all.
Instead, the tokens increased to 21 cents for a short period and now are worth less than a penny each.
The plaintiffs accused Felton of name-dropping celebrities like Mark Cuban to make it appear that he and other rich people were investing in FLiK. T.I. posted a photo of himself and Kevin Hart as well, and the comedian congratulated him on the company.
All together the group said they lost about $2 million, and their attorney Alexander Loftus is now suing for $5 million since the coins barely have any value at all.
But Loftus said the case will be about whether T.I. and Felton presented an offer and sale of a security, because if they did, there’s a string of regulations that needed to be followed.
“It’s a legal issue. What is the security?” said Lofton in a phone call with Atlanta Black Star. “And if it’s a security, a bunch of rules apply. Recently there’s been a bunch of pronouncements by the [SEC] that this kind of thing is a security and it’s a complicated legal issue.”
“So really, that’s all we’re suing about, that this is a security and they didn’t treat it like a security, so they need to give the money back,” he added.
The Chicago-based attorney then said Felton isn’t a great guy, but Tip has a lot to do with the suit being filed since he placed himself at the head of FLiK.
“What’s unfortunate is that this guy Felton is a crook, and I’ll be interested to see how long T.I. was involved with and to what level the involvement was,” Loftus explained. “T.I. holds himself out as the owner of this thing, and he [sends] a bunch of tweets that says he’s the owner.”
The suit also alleges that once the tokens increased from 6 cents to 21 cents, Tip and Felton got rid of it to make a profit, better known as the pump and dump scheme, historically used in penny stocks.
“When you have something that there aren’t that many people that own it … it doesn’t take very much good news to increase the value,” said Lofton. “Then once you drive up the value, then if you’re the insider who knows that this is bogus, then you sell all your tokens after it goes up and then it drops.”
But at the core, Loftus explained the case is all about if regulations were followed.
“Is it a security? Yes. Did you register it? No, OK, give the money back,” he stated.
We reached out to T.I.’s attorney Albert A. Chapar, and he said that T.I. is heartbroken by the accusations, didn’t profit from the investors and was also duped.
“Tip is truly disheartened by the lawsuit,” said Chapar in statement sent to ABS. “Tip did not receive a single dollar from Felton or any of the money alleged to have been invested by the Plaintiffs, nor did he have any ownership in the company.”
“Felton has made multiple misrepresentations as well as unauthorized statements about Tip’s involvement. The terribly unfortunate truth is that Felton misused and took advantage of Tip’s name and likeness, thereby victimizing both the investors and Tip.”