Comment on this story
comment
The Securities and Exchange Commission said Wednesday it had accused a handful of celebrities — including Internet provocateur turned professional boxer Jake Paul and actress Lindsay Lohan — of promoting cryptocurrencies without disclosing that they were compensated for it.
Paul, Lohan, former teen heartthrob Austin Mahone, and rapper Soulja Boy (real name DeAndre Cortez Way) were among eight celebrities who had illegally promoted cryptocurrencies Tronix (TRX) and BitTorrent (BTT), according to the SEC.
The SEC also indicted entrepreneur Justin Sun and three of his companies for “the unregistered offering and sale” of TRX and BTT.
The complaint, filed Wednesday in the U.S. District Court for the Southern District of New York, also alleged that Sun “directed the manipulative wash trading of TRX to create the artificial appearance of legitimate investor interest and keep TRX’s price afloat.” hold”, referring to a scheme in which securities are traded substantially simultaneously between associated companies, making the asset “appear to be actively traded without actual beneficial ownership changing”.
Sun — a Chinese entrepreneur-turned-citizen of Grenada, the small island nation in western India that grants citizenship to those who make large investments in the country — garnered global attention in 2019 after paying $4.6 million for a lunch with Warren Buffett had paid. but then canceled and apologized for “excessive self-promotion”.
Instead of having lunch with Warren Buffett, Chinese entrepreneur Justin Sun eats humble cake
The celebrities’ promotional messages about the cryptocurrencies have been released on social media, according to the SEC. Lohan, who has more than 8 million Twitter followers, tweeted on Feb. 11, 2021 that she “already likes” three of Sun’s cryptocurrencies, including TRX. “Super fast and 0 fee”, she wrote. “Nice job @justinsuntron.”
In March 2021 she has promoted an auction – in TRX – for an NFT or non-fungible token of one of their songs. “Just over 9 hours left to bid!” she tweeted on April 1, 2021.
Paul and Lohan — along with rapper Lil Yachty (real name Miles Parks McCollum) — were among six celebrities who agreed to collectively pay more than $400,000 to settle the charges without admitting wrongdoing ; The six were not named in the complaint, as were Mahone and Soulja Boy.
Representatives for Lohan, Paul, Mahone, Soulja Boy and Lil Yachty did not respond to requests for comment. Tron and BitTorrent, which the SEC says are wholly owned by Sun, and Grenada’s State Department, which appointed Sun ambassador to the World Trade Organization in 2021, did not respond to requests for comment.
The indictments weren’t the SEC’s first action against celebrities who allegedly promoted cryptocurrencies illegally. Kim Kardashian agreed to pay $1.26 million to settle SEC fees last year after promoting EthereumMax (EMAX) on social media.
Kim Kardashian Pays $1.26M in SEC Crypto Case
The SEC also issued a legal notice to Coinbase on Wednesday, according to the cryptocurrency platform. Coinbase said it received a “Wells Notice,” warning of impending indictments. The SEC “told us that it identified potential securities law violations, but not much else. We specifically asked the SEC to identify what assets on our platforms they thought could be securities, and they declined,” Paul Grewal, Coinbase’s chief legal officer, wrote in a blog post. The SEC did not immediately respond to a request for comment.
The charges, if imposed, would be the most significant regulatory action yet against Coinbase, which has positioned itself as a kind of responsible adult in the space while other crypto platforms — namely FTX — have collapsed.