Lindsay Lohan, Lil Yachty, Soulja Boy & More Charged by SEC for ‘Illegally Touting’ Crypto
Written by djfrosty on March 22, 2023
Lil Yachty, Lindsay Lohan, Ne-Yo, Soulja Boy and Austin Mahone are among a number of celebrities who have been charged by the Securities and Exchange Commission for peddling crypto currencies “without disclosing that they were compensated for doing so and the amount of their compensation,” according to an SEC announcement Wednesday (March 22).
The artists were charged as part of a larger investigation into crypto companies Tron Foundation Limited, Bit Torrent Foundation Limited, Rainberry Inc and their founder Justin Sun for the “unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT).” The SEC also alleges that Sun “fraudulently manipulat[ed] the secondary market” and “orchestrat[ed] a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation” among other accusations.
The SEC also charged adult film star Kendra Lust and influencer Jake Paul in the case. So far, all of the celebrities tied to Sun and his crypto firms — apart from Mahone and Soulja Boy — have reached settlements with the SEC, paying over $400,000 in “disgorgement, interest and penalties… without admitting or denying the SEC’s findings.”
The SEC’s complaint against Sun and his companies was filed March 22 in the U.S. District Court for the Southern District of New York.
“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. “As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX. Sun further 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.”
“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” said Gurbir S. Grewal, director of the SEC’s division of enforcement. “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities. At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”