Editor’s note: This matter was a civil enforcement action, not a criminal case. The action was dismissed with prejudice in May 2025.
On May 22, 2024, the U.S. District Court for the Western District of Texas granted partial summary judgment in favor of the Securities and Exchange Commission (SEC) in its civil enforcement action against crypto influencer Ian Balina.
The court ruled that Balina offered and sold SPRK Tokens as securities in unregistered transactions, affirming that US securities laws apply to his activities.
SPRK deemed security
The SEC’s civil 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 organized an investment pool of about 68 individuals, to whom he offered and sold SPRK tokens without registering the offering with the SEC as mandated 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’s civil complaint alleged that Balina violated the offering registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and Section 17(b) of the Securities Act by failing to disclose consideration received for his promotions.
The regulator had sought partial summary judgment on the unregistered offering violation and requested a ruling that SPRK Tokens were offered and sold as securities.
Separately, the SEC also 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 other fees and penalties.
Promotion claim remained
The SEC additionally alleged that Balina promoted SPRK tokens on YouTube, Telegram, and social media between May and July 2018. He allegedly failed to disclose that Sparkster Ltd. offered him a 30% bonus on his token purchases in exchange for his promotions.
The promotional claim fell under Section 17(b) of the Securities Act.
Balina moved for summary judgment on both SEC claims. The court denied his requests and did not decide the Section 17(b) claim as a matter of law, leaving the claim unresolved at the time.
On May 1, 2025, the SEC and Balina filed a joint stipulation dismissing the civil enforcement action with prejudice. In its official litigation release, published May 2, the SEC said the dismissal reflected its efforts to reform and renew its regulatory approach to the crypto industry and was not based on an assessment of the merits of the claims.
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