Eight celebrities including actor Lindsay Lohan, influencer Jake Paul and rapper Soulja Boy have been charged by federal regulators with illegally touting two cryptocurrencies and failing to disclose they were paid to do so.
The two cryptocurrencies, Tronix (TRX) and BitTorrent (BTT), were sold by crypto entrepreneur Justin Sun, who was also charged by the Securities and Exchange Commission on Wednesday.
Sun and three of his wholly-owned companies — Tron Foundation Limited, BitTorrent Foundation Ltd. and Rainberry Inc. — are accused of the unregistered offer and sale of crypto asset securities and manipulating the secondary market by "wash trading," which involves quickly buying and selling cryptocurrencies to make them seem like they're being actively traded.
The SEC also says Sun and the companies paid celebrities with vast social media followings to hype TRX and BTT and directed them not to publicly disclose their compensation.
"This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure," SEC chair Gary Gensler said in a statement.
The other celebrities charged in the scheme are:
Each of the eight is accused of illegally touting one or both of the securities.
Six of the celebrities — excluding Soulja Boy (whose legal name is DeAndre Cortez Way) and Mahone — have agreed to pay a total of more than $400,000 to settle the charges without admitting or denying the SEC's findings.
NPR reached out to representatives for each of the celebrities with a request for comment but did not immediately hear back from seven out of the eight. A representative for Jake Paul declined to comment.
Crypto's meteoric rise in popularity led to a wave of celebrities plugging various digital currencies, but regulators' interest in ferreting out illegal behavior in the crypto market has landed several of those stars in legal trouble.
In October, the SEC charged Kim Kardashian with using her Instagram account to tout a cryptocurrency without divulging that she was being paid to promote it.
Copyright 2023 NPR. To see more, visit https://www.npr.org.
