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T.I., also known as Tip, and his business partner Ryan Felton are being sued for $5 million after their cryptocurrency venture called FLik Tokens didn’t live up to expectations. FLik Tokens was launched in August 2017 and the pair had high hopes for the venture, Felton even promised investors that one token would be worth six cents and would rise to $14.99 within the following 15 months.
The lawsuit hinges around the allegation that Tip artificially raised the prices of the tokens with money he had taken from investors. For this reason 25 investors are suing Tip and Felton for securities fraud after they invested $1.3million in the cryptocurrency. Just one year on from the cryptocurrency’s launch, the tokens were worth less than a penny each.
T.I. used his celebrity status to raise the profile of the company, as well as other celebrities such as Kevin Hart who posted an Instagram post promoting the company and claimed Dallas Mavericks owner Mark Cuban also invested. T.I. hasn’t commented on the lawsuit at this point.
This news comes only weeks after the news broke that Floyd Mayweather and DJ Khaled were being sued for their role in promoting a cryptocurrency scam. These cases raise some important issues about the role of celebrities in the cryptocurrency industry.
A survey conducted by Coinbase in 2018 reported that 18% of US students either currently owned, or had owned cryptocurrency. This proves that young people are taking to cryptocurrency and are excited about the movement, trusting it more than some other demographics. It should then be of little surprise that most of these celebrity endorsements for cryptocurrency companies are shared on Instagram, which is the most popular social network among young people.
With cryptocurrency being an emerging technology drumming up a lot of excitement in the finance industry, lots of businessmen are looking to jump on the bandwagon and get their slice of the pie without fully researching the industry and knowing what it takes. This leads the way for poor businesses and also scams in an industry that isn’t yet regulated the same way the traditional finance industry is. Hopefully, as the industry matures, there will be less room for potential scams that may lead people away from cryptocurrency and more room for legitimate and successful cryptocurrency investments.