SEC hits Jake Paul, Lindsey Lohan, Justin Sun with crypto breach
- The SEC unveiled charges against diplomat Justin Sun for fraud and securities violations, while charging celebrity supporters including Jake Paul and Lindsey Lohan.
- The charges relate to Sun’s alleged trading manipulation of two crypto-tokens, and celebrity endorsements that did not disclose compensation.
- The touting violations have almost all been settled without admission or denial of wrongdoing.
Lindsay Lohan attends/performs during a photocall for ‘Speed The Plow’ at the Playhouse Theater on September 30, 2014 in London, England.
Tim P. Whitby | Getty Images
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, Lindsey 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:
- actress Lindsay Lohan
- social media personality Jake Paul
- DeAndre Cortez Way, also known as Soulja Boy
- musician Austin Mahone
- adult actress Michele Mason, known as Kendra Lust
- musician Miles Parks McCollum, known as Lil Yachty
- musician Shaffer Smith, also known as Ne-Yo
- 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 its 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 showcase the unregistered offerings, while specifically asking that they not disclose their 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.
