SEC accuses Lindsay Lohan, Jake Paul and other celebrities of crypto breach
The Securities and Exchange Commission has revealed fraud and unregistered securities charges against crypto entrepreneur and Grenadian diplomat Justin Sun, along with separate violations against the celebrity backers of his Tronix and BitTorrent crypto assets, which included Jake Paul, Lindsay Lohan and Soulja Boy.
The SEC alleged that Sun engaged in fraud by manipulating the trading activity of the two tokens, creating the appearance of active trading when none existed. The unregistered offering and sales fees, on the other hand, are similar to fees the SEC has unveiled against other crypto offerings and exchanges, including Genesis, Gemini and Do Kwon’s Terraform Labs.
“This case demonstrates once again the high risk investors face when crypto-asset securities are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said.
Sun allegedly induced investors to buy TRX and BTT tokens by “orchestrating a campaign in which he and his celebrity promoters concealed the fact that the celebrities were being paid for their tweets,” Gensler said in a statement.
The eight celebrities and influencers were:
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actress Lindsay Lohan
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social media personality Jake Paul
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musician DeAndre Cortez Way, also known as Soulja Boy
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musician Austin Mahone
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adult actress Michele Mason, known as Kendra Lust
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musician Miles Parks McCollum, known as Lil Yachty
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musician Shaffer Smith, also known as Ne-Yo
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musician Aliaune Thiam, also known as Akon
All but Soulja Boy and Mahone agreed to pay a combined $400,000 in disgorgement, interest and penalties to settle the charges. The settlements were not an admission or denial of guilt.
These celebrity supporters would promote the TRX and BTT tokens on social media and recruit others to Tron-affiliated Telegram and Discord channels.
Tron and his supporters’ alleged behavior was part of an “old playbook to mislead and harm investors,” SEC chief enforcement officer Gurbir Grewal said in a statement.
“At the same time, Sun paid celebrities with millions of social media followers to present the unregistered offers, while specifically asking that they not disclose the compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used, Grewal said.
A spokesperson for Lohan told NBC News on March 22 that the actress was “unaware of the disclosure requirement” before she was contacted by officials.
“She agreed to pay a fine to resolve the matter,” the spokesman said.
Sun’s representative at Tron did not immediately return a request for comment. Jake Paul’s representatives declined to comment.
This story first appeared on CNBC.com.
This article was originally published on TODAY.com
