The Securities and Exchange Commission has charged Lindsay Lohan, Jake Paul and six other celebrities for violating investor-protection laws by promoting cryptocurrencies without disclosing they were being compensated for doing so.
The SEC announced Wednesday a number of charges against crypto asset entrepreneur Justin Sun and three of his companies, including “orchestrating a scheme to pay celebrities” to tout his crypto asset securities Tronix and BitTorrent without disclosing their compensation. The commission charged the eight celebrities for being part of that scheme.
Lohan and Paul were charged along with singers Austin Mahone and Akon, rappers Soulja Boy and Lil Yachty, singer-songwriter Ne-Yo, and adult film actress Kendra Lust, according to the SEC release.
Six of the celebrities, excluding Soulja Boy and Mahone, agreed to pay more than $400,000 total to settle without admitting or denying the charges, the SEC said.
“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” SEC Chair Gary Gensler said.
As alleged, Sun, who owns Tron Foundation Limited, BitTorrent Foundation Ltd. and Rainberry Inc., “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,” Gensler said. The SEC complaint, filed in the U.S. District Court for the Southern District of New York, also alleges that Sun specifically directed the celebrities not to disclose their compensation.
The SEC has long urged celebrities and social media figures to use caution when promoting investments to their fans and followers without disclosing their compensation for doing so.
The SEC last year announced a $1.26 million settlement with Kim Kardashian for touting EthereumMax’s “Emax tokens” without disclosing she was paid $250,000 for the promotional Instagram post.