Rapper T.I. and a business partner are being sued by an international group of investors over an alleged $1.3 million cryptocurrency pump-and-dump scheme, according to court documents.

The rapper, whose full name is Clifford Joseph Harris Jr., and his partner are accused of using social media, celebrity endorsements and "well-known industry experts" to tout a cybercurrency called "FLiK," a token that was purportedly tied to a business company of the same name but which has proved to be worthless, according to a complaint filed in U.S. District Court in Atlanta last week.

The lawsuit, which seeks $5 million in damages, also claims that comedian Kevin Hart served as a "celebrity endorser" for FLiK, but he is not named as a defendant.

Listed as a defendant in the lawsuit along with T.I. is Ryan Felton, a Georgia resident who is described as an entertainment executive and, along with T.I., FLiK's controlling shareholder.

The 25 investors who filed the lawsuit claim the token plan was actually a pump-and-dump scheme, alleging that T.I. and Felton sold off their tokens after they used a social media campaign to temporarily drive the price of FLiK up from 6 cents to 21 cents.

After T.I. and Felton cashed in their tokens, the lawsuit says, "Felton stopped responding to the investors and, finally, when the investors realized that they had been duped, Felton created a new company ... to 'acquire' FLiK and speciously told investors that he had nothing to do with the new sham company."

The lawsuit claims that FLiK was pitched as an investment rather than as a digital currency and that it failed to get the necessary securities registrations.

"FLiK was able to avoid many regulatory checks because it collected the money in Bitcoin and other virtual currencies, which can be used as payment without going through any banks or other middlemen that might look into the legality of the transactions," the lawsuit states.

Felton told investors the token would increase in value from 6 cents to $14.99 in 15 months, for a return of 24,983 percent, the lawsuit says.

Instead, investors say, they lost original investments totaling about $1.3 million.

First « 1 2 » Next