Celebrities Settle with SEC Over Failure to Disclose Crypto Campaign Payments
Federal regulators said Lindsay Lohan, Akon, recording artists Ne-Yo and Lil Yachty, boxer and Internet personality Jake Paul, and porn star Kendra Lust agreed to pay more than $400,000 to settle charges that they failed to disclose payments they received from a diplomat to promote cryptocurrencies on social media.
Lindsay Lohan (Photo: John Seb Barber, Flickr, License)The payments were allegedly made by a company owned by Justin Sun, Grenada’s representative to the World Trade Organization and a crypto-asset entrepreneur accused of illegally selling crypto-asset securities and manipulating the market through so-called “wash trading” – a practice. which involves the simultaneous purchase and sale of a security to make it appear as actively traded without an actual change in ownership.
Sun is followed by over three million people on Twitter where he claimed that the accusations are baseless abd that he intends to continue building the most decentralized financial system anyway.
He also said that “it is no secret that” the regulatory framework for digital assets from the US Securities and Exchange Commission (SEC) is still “in its infancy and in need of further development.”
The SEC alleges that the celebrities were told what to say in their social media posts and did not disclose to their millions of followers that they were being paid to promote cryptocurrencies for Sun. No one admitted or denied the SEC’s findings.
Lohan, who lives in Dubai and is pregnant, reportedly received $10,000 for a tweet in which she said she was “exploring #DeFi and already liking $JST, $SUN on $TRX.”
“Good job,” she praised Sun.
Lust, on the other hand, received $955 to encourage people to “only use $TRX because it’s fast, cheap and hot, even PornHub likes it. She thanked Sun.
Lohan’s publicist said the actress was contacted in March 2022, and was unaware of the disclosure requirement. She agreed to pay the fine to settle the case, according to the Associated Press. The actress has been ordered to forfeit the $10,000 payment she received, plus interest, and pay a $30,000 fine.
Rapper Soulja Boy and pop singer Austin Mahone, who were also included in the SEC’s complaint, did not reach a settlement with the agency.
According to the SEC’s complaint, Sun made false public statements to conceal his celebrity campaign and misled investors. He initially tweeted that his companies were not involved in paying celebrities to promote crypto assets and that he did not know who was behind such activities.
One minute later, he tweeted that if any celebrities were paid to promote, they should come forward.
SEC Chairman Gary Gensler said this “again demonstrates the high risk investors face when crypto-asset securities are offered and sold without proper disclosure.”
