NEW YORK (CelebrityAccess) — Lindsay Lohan, Lil Yachty, and Ne-Yo were among the celebrities charged by the Securities & Exchange Commission on Wednesday for allegedly promoting cryptocurrency without disclosing the fact that they were compensated to do so.
The celebrities facing charges were swept up in as part of a larger case brought against crypto asset entrepreneur Justin Sun and his companies Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc.
The SEC charged that Sun and his companies offered unregistered crypto asset securities to investors and engaged in market manipulation through “wash trading” which is the act of buying and selling a security to create trading volume without an actual change in beneficial ownership.
He was also charged with orchestrating a scheme to pay celebrities to promote TRX and BTT to their fans without revealing that they were being paid for their promotional efforts.
The list of celebrities charged in connection with the case includes social media star Jake Paul, recording artists Lindsay Lohan, DeAndre Cortez Way (Soulja Boy), Austin Mahone, Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon), as well as adult film star Michele Mason (Kendra Lust).
According to the SEC, all of the celebrities implicated in the case, except for Soulja Boy and Austin Mahone, agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings.
“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,” added 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.”