The Securities and Exchange Commission (SEC) today announced a settlement with Sparkster, Ltd. and Sajjad Daya.

From April 2018 into July 2018, Sparkster, a developer of software to enable “no code” software development, and its founder, Daya, conducted an unregistered securities offering of crypto asset securities called “SPRK tokens,” raising approximately $30 million from nearly 4,000 investors located in the United States and abroad. The tokens were sold in a so-called “presale” phase in May 2018 and a “crowdsale” phase in July 2018.

Sparkster and Daya represented to investors that SPRK tokens would increase in value, that Sparkster management would continue to improve Sparkster, and that one of the goals was to make the tokens available for trading on a crypto asset trading platform. Sparkster and Daya also utilized promoters to help spread their message to potential investors. Sparkster did not register the offer and sale of the tokens pursuant to federal securities laws, and no exemption from registration was available.

Sparkster and Daya made use of interstate commerce by promoting the Offering on Sparkster’s publicly available website and on social media, and through the use of electronic messaging, and made use of interstate commerce in effectuating the sale of SPRK tokens.

Sparkster and Daya violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without having a registration statement filed or in effect with the Commission or qualifying for an exemption from registration.

Under the terms of the settlement, Respondent Daya must, within 14 days of the entry of the Order, pay a civil money penalty in the amount of $250,000 to the Securities and Exchange Commission. Respondent Sparkster must pay disgorgement of $30,000,000, prejudgment interest of $4,624,754.23, and a civil money penalty of $500,000 to the Securities and Exchange Commission.