SEC Hits Lindsay Lohan, Jake Paul, Soulja Boy And Others With Crypto Fraud Charges
The Securities and Exchange Commission on Wednesday unveiled fraud and unregistered securities charges against Tronix crypto founder and Grenadian diplomat Justin Sun, as well as separate charges against celebrity backers of his TRON and BitTorrent crypto assets - which included Soulja Boy, Lindsay Lohan and Jake Paul.
SEC Chair Gary Gensler said that Sun convinced investors to buy 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 tweet."
According to the charges, Sun engaged in fraud by manipulating the trading of both tokens, which created the appearance of legitimate trading volume when it did not exist. Meanwhile, the unregistered 'offer and sale' charges are similar to those filed against Genesis, Gemini and Do Kwon's Terraform Labs, CNBC reports.
"This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure," Gensler continued.
The celebrity backers promoted TRX and BTT on social media, and recruited others to join Tron-affiliated Discord and Telegram channels in what SEC enforcement chief Gurbir Grewal called part of an "age-old playbook to mislead and harm investors."
"At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing 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 continued.
The eight celebrities and influencers were (via CNBC)
- actress Lindsay Lohan
- social-media personality Jake Paul
- musician 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
Everyone with the exception of Soulja Boy and Mahone agreed to a collective $400,000 payment in disgorgement, interest and penalties to settle the charges, which, were not an admittance or denial of guilt.
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