NewslettersSign inAPP
spainSPAINchileCHILEcolombiaCOLOMBIAusaUSAmexicoMEXICOlatin usaLATIN USAamericaAMERICA


Which celebrities have been charged by SEC for illegally promoting crypto?

Justin Sun, the founder of two crypto assets, Tronix and BitTorrent, has been charged with fraud along with eight celebrities for illegally promoting them.

Lindsay Lohan and Jake Paul among eight celebrities charged in crypto scam

The US Securities and Exchange Commission (SEC) has announced charges against Chinese cryptocurrency entrepreneur Justin Sun and three of his companies for illegally selling crypto securities and fraudulently inflating the trading volume of them. As well eight celebrities have been charged with illegally promoting the crypto assets Sun founded, Tronix (TRX) and BitTorren (BTT), while not disclosing that they were paid to do so.

Among the celebrities charged are actress Lindsay Lohan and social media personality and professional boxer Jake Paul. They along with four other of the accused agreed to settle with the SEC and pay collectively over $400,000 in disgorgement, interest, and penalties to settle the charges. As part of the agreement, they neither admit guilt nor deny the charges.

The two other celebrities charged by the SEC, musicians DeAndre Cortez Way (aka Soulja Boy) and Austin Mahone, have not yet entered into a deal with the securities regulator.

What are the charges against the eight celebrities?

The SEC alleges that Sun and his companies Tron Foundation Limited, BitTorrent Foundation Limited and Rainberry Inc engaged in a scheme to distribute billions of crypto assets through multiple unregistered “bounty programs.” The scheme used interested parties to promote the tokens on social media and directed them to join and recruit others to Tron-affiliated Telegram and Discord channels.

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

In addition to the before mentioned celebrities adult actress Michele Mason (aka Kendra Lust) and musicians Miles Parks McCollum (aka Lil Yachty), Shaffer Smith (aka Ne-Yo) and Aliaune Thiam (aka Akon) were also named in the lawsuit.

Sun accused of fraudulently inflating trade volume of crypto assets

Starting in at least April 2018 and running through February 2019, Sun allegedly had employees engage in wash trades whereby crypto assets were traded simultaneously or near-simultaneously between two platforms, both of which he owned. By doing this he created the perception that they were being actively traded, but there was no actual change in beneficial ownership, which in turn artificially inflated the trading volume on the secondary market.

The scheme violated the antifraud and market manipulation provisions of the federal securities laws. The 600,000 wash trades that were performed, with between 4.5 million and 7.4 million TRX wash traded daily, garnered Sun proceeds of $31 million according to the SEC allegations.

Furthermore he is accused of making unregistered airdrops to investors, including in the US, where his three companies would offer and sell BTT that they would use to purchase TRX and hold them in Tron wallets or on participating crypto asset trading platforms. Each of the unregistered offers and sales violated Section 5 of the Securities Act the complaint states.

“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” said SEC Chair Gary Gensler.


To be able to comment you must be registered and logged in. Forgot password?