Court sides with SEC in case against crypto influencer Ian Balina

Crypto investor and YouTuber Ian Balina broke U.S. securities laws when he offered and sold SPRK tokens, a Texas district court ruled on Wednesday. 

The judge said that securities laws applied to Balina and that SPRK tokens met the criteria of the Howey Test, a 1946 U.S. Supreme Court case frequently cited by the SEC in cases involving crypto, to determine if an asset qualifies as an investment contract and, therefore, a security.

"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 concluded.

Balina was charged in September 2022 over his involvement with an unregistered initial coin offering (ICO). The SEC's allegations center around the ICO for Sparkster, which was pitched as a "no-code" development platform. The platform agreed to get rid of its remaining tokens in 2022 and did not admit or deny the SEC's findings. 

The SEC said Balina bought $5 million worth of SPRK tokens and promoted them on YouTube, Telegram and other social media platforms. The agency also alleged that Balina failed to disclose that Sparkster agreed to pay a 30% bonus on the tokens that he bought "as consideration for his promotional efforts." Balina also allegedly organized an "investing pool" of about 68 people to whom he offered and sold those tokens. Balina should have registered the offering, the SEC said. 

Balina did not immediately respond to a request for comment.

In a post on his website, Balina called the SEC's charges "an unfounded effort based upon multiple misconceptions of fact and law."