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SEC charges Jake Paul, Akon, Lindsay Lohan, and other celebs for allegedly peddling crypto without revealing they were on the take

Photo by Francois Nel/Getty Images

Seven celebrities and a porn star are facing heat over allegedly peddling digital assets without revealing their financial incentives for doing so.

The Securities and Exchange Commission announced Wednesday that it had charged the following individuals for "illegally touting" crypto asset securities Tronix and BitTorrent: Jake Paul; Lindsay Lohan; DeAndre Cortez Way (Soulja Boy); Austin Mahone; Michele Mason (the porn star Kendra Lust); Aliaune Thiam (Akon); Miles Parks McCollum (Lil Yachty); and Shaffer Smith (Ne-Yo).

The SEC is taking these individuals to task for allegedly pushing the cryptocurrencies "without disclosing that they they were compensated for doing so and the amount of their compensation."

Lohan tweeted in one instance that she was "liking" $TRX and commended the crypto asset entrepreneur behind the cryptocurrencies, Justin Sun, on the job he was doing.

According to the SEC, Lohan made this post to her then-8.4 million Twitter followers for a payment of $10,000 from the crypto issuer through an intermediary. Having done so without fully disclosing the receipt of this payment, Lohan allegedly violated Section 17(b) of the Securities Act.

Jake Paul, a YouTuber with a recent penchant for boxing, similarly pushed TRX with a Feb. 12 Twitter post containing a rocket ship emoji.

The SEC indicated that Paul got paid over twice ($25,019) what Lohan received, albeit in crypto assets, despite having had less than half of the actress' twitter followers. He too is accused of violating the Securities Act.

All of those charged, with the exception of Mahone and Soulja Boy, have agreed to pay a sum over $400,000 to settle the charges, although they have not admitted or denied the charges, the SEC said.

Although less popular than the celebs, Sun appears to be in more trouble.

The SEC complaint, filed in the U.S. District Court for the Southern District of New York, claimed that Sun had the celebrities promote the crypto tokens on social media and recruit others to do likewise.

The SEC also charged Sun and three of his wholly owned companies — Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. — for the alleged unregistered offer and sale of TRX and BTT and for "fraudulently manipulating the secondary market for TRX through extensive wash trading, which involves the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership."

"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," said SEC chair Gary Gensler.

Gensler added, "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."

Gurbir S. Grewal, director of the SEC’s division of enforcement, said in a statement, "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."

"Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation," said Grewal. "This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used."

TheBlaze previously reported that Jimmy Fallon, Madonna, Paris Hilton, Serena Williams, and other celebrities had been accused of promoting Bored Ape Yacht Club (BAYC) non-fungible tokens at artificially increased prices without disclosing their financial stakes or personal interests, thereby misleading investors and violating both state and federal laws.

A class action lawsuit was filed against the celebrities in December detailing how the celebrity promoters, allegedly engaged in "unlawful, unfair, and deceptive practices," played a significant and lucrative role in a conspiracy engineered by Hollywood elites.

Deadline reported that, before the crash, celebrities like Jimmy Fallon publicly praised the Bad Ape NFTs, claiming to be customers themselves. Fallon, for instance, did so on "The Tonight Show" in November 2021.

Celebrity promoters such as Fallon and Hilton allegedly received clandestine payments from Yuga Labs — the blockchain start-up company behind the BAYC NFTs.

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