Sparkster SPRK

What the record shows

On September 19, 2022 the SEC settled a cease-and-desist case against Sparkster, Ltd., the company behind SPRK, and its founder [1] [2]. The order found that from April 2018 to July 2018 the two raised about $30 million from nearly 4,000 investors by selling SPRK tokens [2]. The order also found that the offering was not registered and that no exemption from registration was available [3].

The order finds violations of Sections 5(a) and 5(c) of the Securities Act, the rules that require an offering to be registered [2]. It makes no finding of fraud [3]. The company and its founder settled without admitting or denying the findings [1].

The two were ordered to pay a total of $35,374,754.23 in disgorgement, interest, and penalties [2]. The company also agreed to destroy the SPRK tokens in its possession or control, to ask trading platforms to remove SPRK, and to publish the order [1] [3]. The founder agreed to stay out of offerings of crypto asset securities for five years [1].

What the chain shows

SPRK has two contracts on Ethereum. Etherscan marks the first as migrated and names the second address [6]. The verified code of the second contract is named SparksterTokenSwap [7]. The order says that by September 6, 2019 a new contract had been set up and existing tokens swapped for new ones, and SPRK was then listed on another trading platform [3].

A swapTokens call to the second contract succeeded on January 10, 2025 [8] [9]. In it, 8,780 SPRK of the first contract went in, and 8,780 SPRK of the second came back [8]. Whether the swap still works today is not verified here, and no source states a deadline for it.

The order’s account of 2019 and the 2025 transaction are both printed here, and conflict ledger row 24 records the difference.

Claims and distributions

The order created a Fair Fund, so that money collected can be paid to harmed investors [2]. On April 11, 2024 the SEC appointed a fund administrator [2]. An order of August 11, 2025 says the fund then held $20,750,000.00, and that later collections will be added [4].

The SEC keeps a list of the notices, orders, and plans for its Fair Funds in administrative cases, last updated in September 2026. For this fund it lists four orders and no plan of distribution, claim form, or claims deadline [5]. The terms of any payment are not yet known.

Tax treatment

The settled order does not create a loss. A loss needs a closed transaction. The IRS Chief Counsel memo on crypto that has crashed says a token that still trades on an exchange is not worthless, and a holder who still controls it has not abandoned it [10]. The memo reads a worthlessness loss for an individual as a miscellaneous itemized deduction, and the statute now allows none of those for any tax year after 2017, with no end date [12].

A sale is different. The IRS FAQ says a sale of virtual currency for real currency is a capital gain or loss, reported on Form 8949 and summarized on Schedule D [11]. This site has not checked two questions against a primary source: how a Fair Fund payment is taxed, and whether the swap from the first contract to the second was a taxable exchange.

What a holder can do

The recover-or-write-off table further down lists three things a holder can do with what is left. None of them is a recommendation. Each one produces a different receipt, and the IRS reads the receipt.