Winners & losers: Khaby Lame reportedly went from TikTok's silent reaction king to supposed near-billionaire overnight in January, when little-known Rich Sparkle Holdings announced a $975 million deal for Step Distinctive Limited, the company tied to his commercial rights. While it looked like a straight sale, it wasn't.
The transaction was structured as an all-stock deal for 75 million new shares, not a cash payout, briefly turning Lame into a paper billionaire as Rich Sparkle shares surged. An SEC filing also said Lame directly and indirectly controlled 49% of Step Distinctive.
Now that the stock mania has cooled, the warning signs are hard to ignore.
Business Insider reports that Rich Sparkle shares have fallen more than 90% from their January peak, wiping out most of the paper value behind the deal.
Several major brokerages, including Interactive Brokers, Fidelity, Charles Schwab, Vanguard, Merrill, and ETrade, have either restricted or blocked trading in the stock. Robinhood and Webull still allow trading, but when that many firms start putting up roadblocks, it's usually not a sign of confidence in what comes next.
Even more troubling is the lack of clarity over whether the deal actually closed. Rich Sparkle described the acquisition as completed in a January press release, but BI says the March 31 SEC filing still listed the transaction as contingent on certain conditions.
The original January filing also made clear that the deal depended on a valuation of at least $900 million, due diligence, and exchange approval for the consideration shares. There have been no formal filings showing the deal is officially done or that the promised shares were issued.
The stock spike, promotional hype, murky filings, and subsequent collapse have started to resemble the familiar signs of a possible pump-and-dump.
Then there is the pitch itself. Rich Sparkle said it wanted to build an AI avatar of Lame that could handle brand deals and sell products across social platforms, with the company floating a very ambitious $4 billion annual sales target.
BI reported that industry insiders were skeptical of the forecast, and the broader concept of turning one of social media's biggest personalities into a public-market AI commerce machine sounded a lot more compelling in a press release than in reality.
Lame's silence has only added to the unease. BI says he has not publicly commented on the deal since January, removed Rich Sparkle's ticker from his social bios, and did not respond to requests for comment.