United States regulatory agency, the Securities and Exchange Commission, has charged eight celebrities in a crypto scheme tied to Justin Sun and his companies, Tron Foundation Limited, BitTorrent Foundation Ltd and Rainberry Inc.
According to Hollywood Reporter, the celebrities and music stars were charged with touting cryptocurrencies associated with Sun’s companies “without disclosing that they were compensated for doing so and the amount of their compensation.
”SEC is charging the celebs who include actress Lindsay Lohan; influencer and boxer Jake Paul; adult film star Kendra Lust; and rappers and singers Soulja Boy, Ne-Yo, Lil Yachty, Akon and Austin Mahone.
“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,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “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.”
The SEC said that with the exception of Mahone and Soulja Boy (real name DeAndre Cortez Way), the stars have agreed to pay a penalty of more than $400,000, without admitting or denying the charges.
Celebrity crypto endorsements have been a hot-button legal issue in recent months. Last year, Kim Kardashian agreed to a $1.2 million settlement in connection with her promotion of the EMA token.
In a related development, investors in the bankrupt crypto exchange FTX sued that firm’s celebrity endorsers, including Tom Brady and Larry David, alleging that they were effectively defrauding investors by convincing them to put their money into FTX and touting it as a safe space in the crypto ecosystem.
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