The Securities and Exchange Commission (SEC) has charged seven celebrities and a porn star for allegedly promoting digital assets without disclosing their financial incentives for doing so. Among those charged were Jake Paul, Lindsay Lohan, Soulja Boy, Austin Mahone, Kendra Lust, Akon, Lil Yachty, and Ne-Yo, who were accused of “illegally touting” crypto asset securities Tronix and BitTorrent.
According to the SEC, these individuals promoted the cryptocurrencies without disclosing that they were being compensated for doing so and the amount of their compensation. The regulatory body is holding them accountable for their actions.
In one instance, Lohan tweeted that she was “liking” $TRX and praised Justin Sun, the entrepreneur behind the crypto assets, for his work. However, she failed to disclose that she had financial incentives for doing so.
The SEC’s action sends a clear message that individuals, even those with large followings and celebrity status, must adhere to the same rules and regulations as everyone else when promoting financial products. It also highlights the importance of transparency and full disclosure in the crypto industry, where the potential for fraud and manipulation is high.
Lindsay Lohan is under fire for allegedly promoting a cryptocurrency without fully disclosing the payment she received for doing so. The Securities and Exchange Commission (SEC) claims that Lohan made a tweet to her 8.4 million Twitter followers endorsing the crypto issuer for a payment of $10,000 through an intermediary. The SEC has charged Lohan with violating Section 17(b) of the Securities Act for not fully disclosing the payment she received.
— Lindsay Lohan (@lindsaylohan) February 11, 2021
Jake Paul, the popular YouTuber known for his recent boxing ventures, has been accused of pushing TRX in a tweet he posted on February 12th that featured a rocket ship emoji. According to the SEC, Paul received over $25,000 in crypto assets for his tweet, more than double what Lindsay Lohan received for a similar post. The SEC alleges that both Paul and Lohan violated the Securities Act by failing to disclose their financial incentives for promoting the crypto assets. The SEC has charged a total of seven celebrities and a porn star with similar violations, with the exception of Austin Mahone and Soulja Boy. While most of those charged have agreed to pay over $400,000 to settle the charges, they have not admitted or denied the allegations. Meanwhile, Justin Sun, the entrepreneur behind the cryptocurrencies, appears to be in more serious trouble than the celebrities.
In a complaint filed in the U.S. District Court for the Southern District of New York, the SEC accused Justin Sun of having celebrities promote TRX and BTT tokens on social media and recruit others to do the same. Sun and his companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., were charged with the unregistered offer and sale of TRX and BTT, as well as “fraudulently manipulating the secondary market for TRX through extensive wash trading.”
SEC Chair Gary Gensler commented on the charges, stating that “Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal 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.”
A lawsuit filed in December accused the celebrities of engaging in “unlawful, unfair, and deceptive practices,” and played a significant role in a conspiracy by Hollywood elites. According to Deadline, some celebrities like Jimmy Fallon, who praised the Bad Ape NFTs, even claimed to be customers themselves. In November 2021, Fallon lauded the NFTs on “The Tonight Show.” Hilton and Fallon, among others, were allegedly paid secretly by Yuga Labs, the blockchain start-up company responsible for the BAYC NFTs.