Film producer pleads guilty to $2,5 million crypto fraud

What’s new? Atlanta-based film producer Ryan Felton has pleaded guilty to fraud and money laundering received for promoting fraudulent crypto investment schemes. He solicited investors for an initial coin offering (ICO) for an entertainment streaming platform called FLiK in 2017, claiming it would surpass the popular Netflix service. During the fraud, Felton defrauded depositors of more than $2,5 million, according to the US Department of Justice (DOJ).

Information on the DOJ’s website

How did Felton solicit investors? To entice investors to buy the FLiK coins, the film producer claimed that the company was co-owned by a famous Atlanta rapper and actor. Also, according to him, the US military had agreed to distribute the streaming platform to military personnel, and FLiK was finalizing licensing deals with major film and television studios. The DOJ noted that none of these allegations were true.

What do law enforcement officers say? According to the DOJ’s representatives, once the ICO ended, Felton dumped more than 40 million FLiK coins he owned, causing the value of the token to plummet. Instead of using investor funds to develop FLiK as promised, the film producer diverted about $2,4 million in token proceeds from their sale to his account and used the money for personal purposes, including buying real estate, cars, and jewelry.

What else was the fraudster involved in? According to the DOJ, Felton ran a similar scheme for cryptocurrency exchange CoinSpark in 2018, attracting investors to Spark’s ICO. The producer claimed that they would receive 25% of the exchange’s profits in the form of dividends. He also claimed that a certain international accounting firm would conduct quarterly audits of the project, which was also untrue. In addition, he used numerous fake social media accounts to create hype around CoinSpark.

Felton raised more than $200 000 in the ICO, and subsequently told investors that CoinSpark would no longer be able to provide the promised payout and transferred the funds to his account. The exchange was launched months later than promised and had low trading activity.

Felton pleaded guilty to securities fraud, wire fraud, and money laundering. A sentencing hearing has not yet been scheduled.

Earlier, a Boston jury found the creator of My Big Coin (MBC), a fake cryptocurrency, Randall Crater, guilty of fraud. He defrauded investors of $6 million by claiming that the asset was backed by $300 million in gold and could be bought and sold on a virtual exchange.