Lindsay Lohan, Jake Paul, Lil Yachty, other celebs hit with SEC charges for boosting crypto
In the latest example of what has become an ongoing trend in the world of cryptocurrency, the Securities and Exchange Commission on Wednesday announced charges against a number of celebrities for boosting crypto assets without properly disclosing that they were paid for their endorsements.
Those charged include “Mean Girls” and “Falling for Christmas” star Lindsay Lohan, social media personality and boxer Jake Paul and rapper Soulja Boy, according to an SEC release. Porn actress Kendra Lust and musicians Lil Yachty, Ne-Yo, Austin Mahone and Akon were also named in the agency’s complaint.
The main focus of the SEC charges is Justin Sun, described as a “crypto-asset entrepreneur” who owns a handful of crypto-related companies, including the Tron Foundation and the BitTorrent Foundation. He has been charged “with the unregistered offering and sale of crypto-asset securities Tronix (TRX) and BitTorrent (BTT),” the SEC said in its release.
Sun, 32, is a Chinese national who is currently the Permanent Representative of Grenada to the World Trade Organization and is believed to be living in Singapore or Hong Kong, the SEC said.
The celebrities named by the SEC were charged with “unlawfully touting” TRX and/or BTT crypto-tokens “without disclosing that they were compensated for doing so and the amount of their compensation.”
The complaint was filed in a federal district court in New York. SEC Chairman Gary Gensler said in a statement that Sun “incited investors to buy TRX and BTT by orchestrating an advertising campaign in which he and his celebrity promoters concealed the fact that the celebrities were being paid for their tweets.”
With the exception of Soulja Boy and Mahone, the celebrities agreed to pay a total of more than $400,000 to settle the charges, without admitting or denying the SEC’s findings, the commission said.
“Lindsay was contacted in March 2022 and was unaware of the disclosure requirement,” Leslie Sloane, a spokesperson for Lohan, said in an email. “She agreed to pay a fine to settle the matter.”
None of the seven other celebrities, or their representatives, immediately responded to requests for comment. Sun could not immediately be reached for comment.
The crypto industry, currently reeling through a prolonged period of decline, has long had a cozy relationship with celebrities, who offer publicity and legitimacy to the otherwise niche, complicated and often fraud-ridden world of finance.
The 2022 Super Bowl was awash with star-studded crypto ads (which were noticeably absent in 2023), and a memorable “Tonight Show” segment from the same year found Jimmy Fallon and Paris Hilton showing off their non-fungible tokens (or NFTs). a particularly frothy subclass of cryptoassets.
But that crypto-celebrity relationship doesn’t always end well.
Last October, the SEC fined media juggernaut Kim Kardashian more than $1 million for promoting various crypto assets, EthereumMax crypto tokens, on Instagram without disclosing that she was paid to do so. Similar allegations were made against Floyd Mayweather Jr. and DJ Khaled in 2018, and Steven Seagal in 2020.
A recent class action lawsuit sought to hold Tom Brady, Larry David, Steph Curry, Shaquille O’Neal and other major celebrities and athletes liable for their promotion of FTX, the crypto trading platform that suddenly collapsed late last year.
The SEC’s latest filings shed further light on the financial relationships between famous individuals and the crypto economy.
One document says Lohan was paid $10,000 in February 2021 to promote TRX tokens on Twitter. According to a screenshot included in the archive, Lohan tweeted — using language provided to her by one of Sun’s companies — “Exploring #DeFi and already liking $JST, $SUN on $TRX. Super fast and 0 fees. Great job @justinsuntron.”
Around the same time, according to another filing, Paul promoted TRX on Twitter “in exchange for a payment of crypto assets, valued at approximately $25,019.” Again, Tron “provided Paul with the specific language to be included in the Tweet,” the SEC filing says.
This story originally appeared in the Los Angeles Times.
