Lindsay Lohan, Jake Paul, and Ne-Yo among celebrities in crypto violation complaint
Lindsay Lohan, Jake Paul, and Ne-Yo are among eight celebrities hit with charges by the Securities and Exchange Commission for cryptocurrency violations.
On Wednesday, the SEC announced charges against crypto asset entrepreneur Justin Sun and three of his companies (Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc.) for the unregistered offer and sale of crypto asset securities, as well as spearheading a scheme to pay celebrities to tout such assets without disclosing their compensation.
In addition to the trio above, the SEC charged Soulja Boy (real name DeAndre Cortez Way), Austin Mahone, Lil Yachty (Miles Parks McCollum), Akon (Aliaune Thiam), and Kendra Lust (Michele Mason) for "illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation," per the SEC.
David M. Benett/Getty; Katelyn Mulcahy/Getty; Rachel Murray/Getty Lindsay Lohan; Jake Paul; Ne-Yo
With the exception of Soulja Boy and Mahone, all the celebrities have settled with a collective of more than $400,000 without admittance or denial of wrongdoing, the SEC said. A rep for Lohan told EW the actress was unaware of the disclosure requirement and promptly paid the fine to resolve the matter. Representatives for the other figures in the complaint did not immediately respond to EW's request for comment.
The SEC's complaint, filed in U.S. District Court for the Southern District of New York, alleged that Sun "violated the antifraud and market manipulation provisions" of federal security laws by "orchestrating a scheme to artificially inflate the apparent trading volume of TRX in the secondary market" between the period of April 2018 through February 2019, among other allegations. In a statement, SEC chair Gary Gensler said the case 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 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," Gensler said. "Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets."
These were some of the paid tweets that were made without disclosure.
Lohan and Lil Yachty got $10,000, Ne-Yo got $12,000, and somehow Jake Paul got $25,000 for retweeting Lil Yachty. If I was Lil Yachty I'd be mad lol pic.twitter.com/MfcYvZyYRN
— web3 is going just great (@web3isgreat) March 22, 2023
"While we're neutral about the technologies at issue, we're anything but neutral when it comes to investor protection," Gurbir Grewal, director of the SEC's Division of Enforcement, added. "As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities. . . This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used."