The Atlanta division of the United States district court of the northern district of Georgia claims in an order published on May 20 on Twitter by lawyer Stephen Palley that Rapper T.I. — real name Clifford Joseph Harris Jr. — sold unregistered securities in his FLiK initial coin offering (ICO).
According to the document published by Palley, although the flik tokens had additional functionality (such as granting access to events), the token holders were promised profits from the work of the company. Harris’ business partner Ryan Felton allegedly said on social media:
“FLiK tokens will be redeemable for $3.99 in 3 months, $9.99 in 12 months and $14.99 in 15 months […] This represents TREMENDOUS growth in 1 year.”
Still, according to Palley, the court noted that there is a problem, since claims for unregistered sale of securities have to be brought to court within a year after the violation under federal law. He concludes that “because this isn’t pleaded, these claims are dismissed with leave to refile.” Lastly, Palley also said that the merits still have to be litigated.
Last week, high-profile boxer Floyd Mayweather and music producer DJ Khaled were been dismissed from a lawsuit brought by investors in a fraudulent ICO.