SEC charges celebrities including Lindsay Lohan over cryptocurrency endorsem*nts (2024)
The Securities and Exchange Commission has filed charges against a handful of celebrities including Lindsay Lohan, Jake Paul and Ne-Yo for violating laws in touting cryptocurrencies.
On Wednesday, the SEC filed the charges against the celebrities as part of its broader charges filed against the crypto entrepreneur Justin Sun and three of his companies: Tron Foundation Ltd, BitTorrent Foundation Ltd, and Rainberry Inc (formerly BitTorrent) for the unregistered offer and sale of the crypto asset securities Tronix (TRX) and BitTorrent (BTT).
The SEC charged eight celebrities, who also included the rappers Soulja Boy and Lil Yachty, the singers Austin Mahone and Akon, and the adult film star Kendra Lust for “illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation”.
According to the SEC, Sun and his companies offered and sold the crypto asset securities as investments through various unregistered “bounty programs”, which directed “interested parties to promote the tokens on social media, join and recruit others to Tron-affiliated Telegram and Discord channels, and create BitTorrent accounts in exchange for TRX and BTT distributions”.
“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” the SEC chair, Gary Gensler, said in a statement.
All mentioned celebrities except for Soulja Boy and Austin Mahone agreed to pay a total of over $400,000 in disgorgement, interest and penalties to settle the charges, without admitting or denying the SEC’s findings.
As a seasoned expert in financial regulations and cryptocurrency matters, I bring a wealth of knowledge and experience to shed light on the recent charges filed by the Securities and Exchange Commission (SEC) against prominent celebrities, namely Lindsay Lohan, Jake Paul, Ne-Yo, Soulja Boy, Lil Yachty, Austin Mahone, Akon, and adult film star Kendra Lust.
The SEC's actions stem from a broader set of charges directed at crypto entrepreneur Justin Sun and his entities, Tron Foundation Ltd, BitTorrent Foundation Ltd, and Rainberry Inc (formerly BitTorrent). The allegations focus on the unregistered offer and sale of crypto asset securities, specifically Tronix (TRX) and BitTorrent (BTT).
Justin Sun and his companies are accused of utilizing "bounty programs" to promote the tokens as investments through various channels. These programs incentivized individuals to engage in activities such as social media promotion, recruitment efforts on Tron-affiliated Telegram and Discord channels, and the creation of BitTorrent accounts in exchange for TRX and BTT distributions.
The SEC contends that the celebrities mentioned, including Lindsay Lohan, Jake Paul, Ne-Yo, Soulja Boy, Lil Yachty, Austin Mahone, Akon, and Kendra Lust, unlawfully endorsed TRX and/or BTT without disclosing their compensation and the corresponding amounts received for such promotions.
Gary Gensler, the Chair of the SEC, emphasized the high risks investors face when crypto asset securities are offered without proper disclosure. The charges underline the importance of transparency in the cryptocurrency space, where investments are particularly susceptible to market volatility and regulatory scrutiny.
Notably, all celebrities involved, with the exception of Soulja Boy and Austin Mahone, have agreed to settle the charges by collectively paying over $400,000 in disgorgement, interest, and penalties. It's essential to recognize that by settling, these individuals are neither admitting nor denying the SEC's findings, but rather opting for resolution without protracted legal battles.
This case serves as a poignant example of the regulatory challenges facing the cryptocurrency industry and highlights the SEC's commitment to enforcing securities laws to protect investors from potential risks associated with unregistered securities offerings in the crypto space.
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The SEC charged eight celebrities, who also included the rappers Soulja Boy and Lil Yachty, the singers Austin Mahone and Akon, and the adult film star Kendra Lust for “illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation”.
Lohan, Paul, Kendra Lust, Lil Yachty, Ne-Yo, and Akon were sued through administrative proceedings, while Mahone and Soulja Boy, along with crypto asset entrepreneur Justin Sun — the creator of TRX and BTT — and his companies were sued by the SEC in SDNY.
The Securities and Exchange Commission on Wednesday charged Lindsay Lohan, Jake Paul and several other celebrities with failing to disclose that they were paid to promote crypto. The celebrities agreed to pay $400,000, including fines, and return what they were paid for the promotion.
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Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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