SEC is indicting eight celebrities, including Lindsay Lohan and Jake Paul, for ‘illegally touting’ crypto and failing to disclose what they were paid for
- In addition to Lohan and Paul, the regulator also charged rappers Soulja Boy and Lil Yachty, singers Akon, Ne-Yo and Austin Mahone and porn star Kendra Lust.
- They are accused of touting cryptos without disclosing that they were paid
- The eight face charges along with Chinese entrepreneur Justin Sun who, in addition to paying the celebs, allegedly manipulated coin prices with fraudulent transactions
The Securities and Exchange Commission (SEC) today charged eight celebrities, including Lindsay Lohan and Jack Paul with ‘illegally promoting’ cryptocurrencies.
In addition to Lohan and Paul, the regulator said rappers Soulja Boy and Lil Yachty, singers Akon, Ne-Yo and Austin Mahone, and porn star Kendra Lust, promoted the assets without disclosing that they were being compensated.
The eight are being charged along with Chinese crypto baron Justin Sun, who not only paid the stars, but also artificially inflated the price of the coins they were touting through a fraudulent practice known as “tradewashing.”
The SEC complaint filed in Manhattan federal court alleges that Sun and its companies offered and sold cryptos through multiple unregistered “bounty programs,” with the celebrities promoting the coins through social media.
With the exception of Soulja Boy and Mahone, the celebrities agreed to pay a total of more than $400,000 to settle the charges, without admitting or denying the SEC’s findings.
Lindsay Lohan appears at the Christian Siriano Fall/Winter 2023 fashion show in New York on February 9, 2023
YouTuber turned boxer Jake Paul in the ring in Riyadh, Saudi Arabia, ahead of his fight with Love Island star Tommy Fury on Feb. 26. Paul lost the fight by split decision
As of about August 2017, Sun and its companies Tron Foundation Limited, BitTorrent Foundation Limited and Rainberry Inc were involved in a plan to distribute billions of crypto assets known as Tronix (TRX) and BitTorrent (BTT), the SEC said.
That included using “bounty programs” that direct interested parties to promote the currencies on social media, including to US-based investors, the SEC said.
TRX and BTT were sold as securities, so their sales had to be registered with the SEC, the regulator said in its complaint filed in Manhattan federal court.
Sun, who was named Grenada’s ambassador to the World Trade Organization (WTO) last year, also violated anti-fraud and market manipulation laws by orchestrating a plan to inflate apparent trading volume in TRX on the secondary market through wash trading, the SEC said .
This includes buying and selling an asset simultaneously or nearly simultaneously to give it the impression that the asset is being traded.
From at least April 2018 to February 2019, he allegedly directed employees to make more than 600,000 TRX trades between two accounts he controlled.
This generated $31 million in proceeds from illegal, unrecorded offerings and sales of the tokens, the SEC said.
SEC Chairman Gary Gensler said in a statement, “This case demonstrates once again the risk investors face when crypto asset securities are offered and sold without proper disclosure.
As alleged, Sun and its companies not only targeted U.S. investors with their unregistered offerings and sales, generating millions in illicit proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading. in TRX.
“Sun further pushed investors to buy TRX and BTT by staging a promotional campaign in which he and his celebrity promoters hid that the celebrities were being paid for their tweets.”
Lawyers for the celebrities and Rainberry did not immediately respond to requests for comment. A Sun lawyer could not be immediately identified.