Khaby Lame’s $975M TikTok AI Twin Deal Raises New Red Flags

Khaby Lame’s blockbuster plan to turn his TikTok fame into a nearly $1 billion business is facing new scrutiny after several major brokerages restricted trading in the stock tied to the deal.

The TikTok star, who has more than 160 million followers on the platform and more than 360 million across social media, announced in January that he would sell his company, Step Distinctive Limited, to Hong Kong-based Rich Sparkle Holdings in an all-stock transaction valued at roughly $975 million.

The agreement called for Lame to receive 75 million ordinary shares in Rich Sparkle, the publicly traded company that would gain exclusive global rights to his brand for the next 36 months.

Rich Sparkle said it planned to use Lame’s audience to power everything from TikTok Shop sales to endorsement deals and branded products.

At the center of the strategy was an “AI Digital Twin” built from Lame’s face, voice, and behavior, allowing a virtual version of the creator to livestream and sell products around the clock in multiple languages.

The announcement initially sent Rich Sparkle’s stock soaring as day traders rushed to buy shares. At one point, the stock climbed to nearly $180.

But according to a new Business Insider report, the excitement has now collapsed. Rich Sparkle shares have fallen more than 90% from their January peak, and firms including E*Trade, Merrill Lynch, Fidelity, Charles Schwab, Vanguard, and Interactive Brokers either restricted or blocked trading in the stock.

Interactive Brokers said it periodically reviews which securities it offers clients and removes those it believes are “not appropriate to offer.” James Angel, a finance professor and director of Georgetown University’s FINRA program, said some firms limit access to low-market-cap stocks because they can disappear quickly or create logistical problems.

“Brokers feel they are doing their customers — as well as their back offices — a favor by not letting customers buy them,” Angel said to the outlet.

Questions about the deal itself have only added to the uncertainty. Although Rich Sparkle described the acquisition as “completed” in a January press release, the company’s most recent SEC filing, submitted March 31, still said the transaction depended on several unresolved conditions.

An earlier filing stated the agreement would become void if those conditions were not satisfied or waived by February 28.

To date, there is still no public filing confirming that Lame’s company received the 75 million shares it was promised. Rich Sparkle, which is registered in the British Virgin Islands and based in Hong Kong, has not responded to repeated requests for comment.