The SEC charges eight celebrities, including Lindsay Lohan and Jake Paul, with “illegally promoting” cryptocurrencies and failing to disclose what they were paid
- In addition to Lohan and Paul, the regulator charged rappers Soulja Boy and Lil Yachty, singers Akon, Ne-Yo and Austin Mahone, and porn star Kendra Lust.
- They are accused of promoting crypto without disclosing that they were being paid
- All eight are charged along with Chinese businessman Justin Sun who, in addition to paying off celebrities, allegedly manipulated coin prices with fraudulent exchanges.
The Securities and Exchange Commission (SEC) today charged eight celebrities, including Lindsay Lohan and Jake Paul, with “illegally promoting” cryptocurrencies.
In addition to Lohan and Paul, the regulator accused rappers Soulja Boy and Lil Yachty, singers Akon, Ne-Yo and Austin Mahone, and porn star Kendra Lust, of promoting the assets without disclosing that they were being compensated.
All eight are charged along with Chinese crypto baron Justin Sun who, in addition to paying stars, allegedly artificially inflated the price of the coins they were promoting through a practice known as “trade laundering.”
The SEC complaint filed in Manhattan federal court alleges that Sun and his companies offered and sold crypto through multiple unregistered “bounty programs,” which directed celebrities to promote the tokens on social media.
With the exception of Soulja Boy and Mahone, the celebrities have 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
Around August 2017, Sun and its companies Tron Foundation Limited, BitTorrent Foundation Limited, and Rainberry Inc became involved in a scheme to distribute billions of crypto assets known as Tronix (TRX) and BitTorrent (BTT), the SEC said.
That included the use of “bounty programs” that direct interested parties to promote the coins on social media, including among US investors, the SEC said.
TRX and BTT were sold as securities and therefore their sale had to be registered with the SEC, the regulator said in its lawsuit filed in Manhattan federal court.
Sun, who was appointed Grenada’s ambassador to the World Trade Organization (WTO) last year, also violated anti-fraud and market manipulation laws by orchestrating a scheme to inflate the apparent trading volume in TRX on the secondary market. through laundering operations, the SEC said.
This involves the simultaneous or near-simultaneous buying and selling of an asset so that it appears to be actively traded.
From at least April 2018 to February 2019, he allegedly ordered employees to conduct more than 600,000 TRX laundering trades between two accounts he controlled.
This profited from $31 million from illegal and unrecorded deals and sales of the tokens, the SEC said.
SEC Chairman Gary Gensler said in a statement: “This case again demonstrates the high risk investors face when crypto asset securities are offered and sold without proper disclosure.”
As alleged, Sun and his companies not only targeted US investors in their unregistered offers and sales, generating millions in illegal revenue at investors’ expense, but also coordinated wash trading on an unregistered trading platform to create the deceptive appearance of active trading. on TRX.
“Sun further induced investors to buy TRX and BTT by staging a promotional campaign in which he and his celebrity promoters hid the fact that celebrities were being paid for their tweets.”
Lawyers for the celebrities and Rainberry did not immediately respond to requests for comment. A lawyer for Sun could not immediately be identified.