The Securities and Exchange Commission (SEC) today announced charges against eight celebrities for “illegally promoting TRX and/or BTT without disclosing that they were compensated and the amount of their compensation.”
Lindsay Lohan, Jake Paul, Akon, Lil Yachty and adult film star Kendra Lust were among the big names who agreed to pay a $400,000 settlement for their involvement in a shady crypto scheme.
None of them pleaded guilty.
The charges were part of a wider investigation into crypto australiabusinessblog.com Justin Sun and his companies Tronix (TRX) and BitTorrent (BTT).
Related: What’s Happening in Crypto, What Happened to FTX, and What Does It Mean for Web3?
According to a complaint filed in federal court in New York, Sun violated securities law by offering cryptocurrencies that were not properly registered. Sun also engaged in “wash trading,” which, according to the SEC, “involves the simultaneous or near simultaneous purchase and sale of a security to make it appear that the asset is being traded without an actual change in beneficial ownership.”
From April 2018 to February 2019, Sun had his employees “execute more than 600,000 TRX trades between two crypto asset trading platform accounts that he controlled,” according to the SEC.
Illegal promotion by celebs
Sun also paid celebrities like Paul and Lohan to promote its unregistered crypto offerings “while specifically specifying that they would not disclose their fee,” the SEC said in a statement.
“This is exactly the behavior that federal securities laws were supposed to protect against,” said Gurbir S. Grewal, director of the SEC’s Department of Enforcement.
But a spokesman for Lohan told Variety“Lindsay was contacted in March 2022 and was unaware of the disclosure requirement. She agreed to pay a fine to resolve the matter.”
The collapse of Sun’s crypto empire is the latest bad news for crypto investors and the celebrities who endorse them.
Tom Brady and Kevin O’Leary were some of the high-profile names involved in the FTX scandal, allegedly losing a lot of money as a result of the crypto exchange’s financial demise. They have not been charged with any crimes.