An Atlanta film producer has recently pleaded guilty to wire fraud and money laundering charges for promoting fraudulent crypto investment schemes that defrauded investors of over $2.5 million.
Man Pleads Guilty to ICO Fraud
In an official statement, the U.S. Department of Justice (DOJ) revealed that the 48-year-old convict, Ryan Felton, promoted an initial coin offering (ICO) for an entertainment streaming platform dubbed FLiK in 2017.
Felton claimed the platform would surpass the popular streaming service Netflix. To further encourage investors to buy the FLiK coins, the film producer asserted that the company was co-owned by a prominent Atlanta rapper and actor, who was fined by the U.S. SEC in 2020.
The convict also told investors that the U.S. military had agreed to distribute FLiK and that the platform was already finalizing licensing deals with major studios. The DOJ noted that none of these claims were true.
Felton convinced investors that he was actively developing the platform and would use all the proceeds from the ICO sale to launch FLiK officially. However, as soon as the ICO ended, he dumped the over 40 million FLiK coins he held, which caused the token’s value to plummet, leaving investors with worthless assets.
The Justice Department also pointed out that instead of using investor funds to develop FLiK as promised, the film producer diverted the proceeds from the token sale, worth approximately $2.4 million, to his personal account.
Felton used this money to fund his extravagant lifestyle, including a $1.5 million home, diamond jewelry, and a Ferrari, among other vehicles.
Same Man, Different Schemes
According to the DOJ, Felton conducted a similar scheme for a crypto exchange called CoinSpark in 2018. He made several false claims to attract investors to the Spark coin ICO.
The convict claimed that investors would receive 25% of the exchange’s profits in dividends and that a renowned accounting firm would audit CoinSpark’s finances every quarter.
As was the case with FLiK, none of the claims were true. He raised over $200,000 in the ICO and subsequently told investors that CoinSpark would no longer be able to provide the 25% promised, offering to refund their investments.
However, Felton ignored investors’ demand for a refund and diverted the funds to his personal account.
Speaking on the case, Attorney Ryan K. Buchanan said: “The defendant used 21st-century technology to perpetrate an age-old fraud: lying to investors to steal their money and fund his own lavish lifestyle. Felton’s conviction should serve as a warning to anyone who seeks to capitalize on emerging technology to victimize others.”
Felton pleaded guilty to twelve counts of wire fraud, ten counts of money laundering, and two counts of securities fraud, which were added on the fourth day of his jury trial. His sentencing hearing is yet to be scheduled.
BLOCKCHAIN NEWS • crypto news