The US Securities and Exchange Commission (SEC) has filed charges against several celebrities for illegally promoting cryptocurrencies. Among those charged were Lindsay Lohan, Ne-Yo, and Jake Paul. The charges were filed as part of broader charges against cryptocurrency entrepreneur Justin Sun and three of his businesses. The SEC accused Sun and his businesses of offering and selling the crypto asset securities BitTorrent (BTT) and Tronix (TRX) without proper registration.
According to the SEC, Sun and his businesses gave out TRX and BTT in exchange for creating BitTorrent accounts, recruiting people to join Tron-related Telegram and Discord channels, and offering and selling crypto asset securities as investments through several unregistered “bounty programs.”
The SEC also charged eight celebrities, including rappers Lil Yachty and Soulja Boy, singer Akon, and adult film star Kendra Lust, for “illegally endorsing TRX and/or BTT without unveiling that they were compensated for doing so and also the amount of their compensation.”
The SEC chair, Gary Gensler, emphasized the high risk investors face when crypto asset securities are offered and sold without proper disclosure. He also said that the case “demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure.”
All celebrities, except for Austin Mahone and Soulja Boy, agreed to pay a total of over $400,000 in disgorgement, interest, and penalties to settle the charges without arguing against the SEC’s findings.
This case highlights the importance of proper disclosure when promoting investments, especially in the cryptocurrency market, where regulations are still being developed. The SEC’s actions serve as a warning to other celebrities and influencers to ensure they are following the rules when promoting financial products.