Eleventh Circuit Affirms Prison Term for Operator of FLiK and CoinSpark Crypto Scams

News | March 6, 2024 By:

On Thursday, February 29, 2024, the United States Court of Appeals for the Eleventh Circuit upheld a 70-month prison sentence for Ryan Felton related to two cryptocurrency schemes that defrauded investors out of over $2.5 million.

Felton was originally charged in late 2021 with 28 counts of wire fraud, money laundering, and securities fraud for operating fraudulent cryptocurrency projects called FLiK and CoinSpark between 2017 and 2018. He pled not guilty and proceeded to a jury trial. However, after three days of trial where prosecutors had presented much of their case, Felton decided to change his plea to guilty for most of the charges.

The charges stemmed from Felton using his expertise in cryptocurrencies and online platforms to create the two entities and carrying out a fraudulent scheme to raise funds from investors. For both FLiK and CoinSpark, Felton made several misrepresentations in online promotional materials regarding the use of funds, celebrity involvement, partnerships with studios, and financial status. He also misled investors as part of a “pump and dump” scheme, encouraging them to hold the cryptocurrencies while he cashed out at inflated prices.

In total, Felton raised over $2.5 million from investors, but court documents indicated he diverted most of the money for personal use on luxury goods rather than the promised business ventures. The scheme resulted in significant losses for victims.

At sentencing, the district court calculated Felton’s offense level and sentencing guidelines range. It applied a two-level enhancement for using sophisticated means, noting Felton’s strategic and complex use of cryptocurrency transactions, accounts, and international entities to carry out and conceal the large-scale fraud. The court also declined to apply a two-level reduction for acceptance of responsibility, as Felton had only pleaded guilty partway through his jury trial without taking other accountability steps.

With the calculations, Felton faced prison terms ranging from 78 to 97 months. Both sides made arguments, with Felton asking for 46 months and prosecutors seeking a mid-range sentence. The court ultimately imposed a slightly below-guideline sentence of 70 months in prison, three years of supervised release, and no fines. It affirmed the sentence would be the same regardless of the two disputed guidelines issues.

On appeal, Felton argued the 70-month sentence was unreasonable due to alleged errors in applying the sophisticated means enhancement and denying an acceptance of responsibility reduction. However, the Eleventh Circuit upheld the sentence, finding that the district court’s rulings on the two guidelines matters were not clearly erroneous given the facts of the case. The appellate panel also noted that any supposed errors would have been harmless and the sentence reasonable. With the ruling, Felton’s 70-month prison term will stand.

Please contact BlockTribune for access to a copy of this filing.