The Securities and Exchange Commission (SEC) announced charges today against eight celebrities for “illegally touting TRX and/or BTT without disclosing that they were compensated for doing so 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 admitted guilt.
The charges were part of a broader investigation into crypto entrepreneur Justin Sun and his companies, Tronix (TRX) and BitTorrent (BTT).
Related: What is 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 committed securities law violations by offering cryptocurrencies that were not correctly 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 actively traded without an actual change in beneficial ownership.”
From April 2018 to February 2019, Sun had his employees “engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled,” according to the SEC.
Illegal promotion by celebs
Sun also paid celebrities such as Paul and Lohan to promote his unregistered crypto offerings “while specifically directing that they not disclose their compensation,” said the SEC in a statement.
“This is the very conduct that the federal securities laws were designed to protect against,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement.
But a spokesperson 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 that endorse them.
Tom Brady and Kevin O’Leary were some of the high-profile names caught up in the FTX scandal, rumored to have lost much money due to the crypto exchange’s financial ruin. They have not been charged with any crimes.