Investors who participated in the FLiK initial coin offering, or ICO, in 2017 have opposed entertainer Kevin Hart’s bid to have the $7 million lawsuit dismissed.
The 25 investors claim that they collectively lost more than $2 million as a result of Hart, rapper ‘T.I.’, and FLiK executive, Ryan Felton, touting unregistered securities for an ICO that ultimately failed to materialize.
ICO investors fight for suit against Kevin Hart to proceed
In their opposition, the plaintiffs argued that the FLiK ICO “depended on” endorsements from celebrities to “elevate the standing” and perception of the offering.
The investors assert that they have “sufficiently pled that Mr. Hart was generally aware of his role in the scheme or at the very least was reckless in promoting an unregistered sham to his 50,000,000 followers.”
Plaintiffs argue that Hart’s endorsement “increased the price of the thinly traded security” — driving the token’s price up by 400% from $0.06 to $0.30 between August and October of 2017, in anticipation of the company’s ICO.
However, prices would crumble 73% over the following year as the tokensale failed to materialize — falling back to $0.08 by September 2018.
Hart accused of materially aiding FLiK
In October 2018, the 25 investors filed a $5 million suit against T.I. and Ryan Felton, claiming that they had been defrauded into purchasing now-worthless unregistered securities as a result of misrepresentations and celebrity endorsements.
The plaintiffs amended their class-action to include $7 million in claims against Kevin Hart during May 2019, with the investors accusing the entertainer of having materially aided the fraudulent tokensale.
In September 2017, Hart posted a photo of himself with T.I. on Facebook alongside a caption that read:
“Me telling [T.I.] how much help he gon need spending all that money he gonna make on his new venture. Lmfao But seriously, I’m Super Excited for T.I. and FLiK They’re gonna crush it! #ICO #blockchain #crypto #bitcoin.”
Charges against T.I. dismissed
On March 3, 2020, T.I. was dismissed of all securities fraud charges relating to the ICO, with U.S. District Judge Charles Pannell ruling that the plaintiffs had failed to find concrete evidence of securities violations.
“The plaintiffs have merely alleged that [T.I.] encouraged his Twitter followers to visit the website for the FLiK ICO,” said Judge Pannell. “They have not provided any statements from Harris about the value of the FLiK tokens.”
In his request for early judgment earlier this month, Hart argued that the fraud allegations laid against him were “threadbare” and exhibit less merit than the now-dismissed claims against T.I.