SEC Charges Jake Paul with Illegal Marketing of Crypto Assets
Anthony OlivieriESPN.com2 minute reading
Jake Paul, the YouTuber turned prizefighter, was among eight celebrities accused by the Securities and Exchange Commission of touting a crypto asset without disclosing they were paid to do so, according to a filing Wednesday.
The filing cited Paul’s tweet on February 12, 2021, promoting Tronix (TRX) tokens. The tokens are securities offered publicly by Tron Foundation Limited, which the filing indicated is owned by Yuchen “Justin” Sun, who was tagged in the tweet. The tweet was in response to one from rapper Lil Yachty, who was also charged, and included a TRX hashtag and a rocket ship emoji.
According to the SEC, Paul’s promotion in exchange for crypto assets was valued at $25,019. Paul had 3.8 million Twitter followers at the time, the filing said. The SEC also cited Section 17(b) of the Securities Act, which states in part that it is “unlawful for any person to: publish, give publicity to… [a security] against consideration received or to be received.”
The filing indicated that Paul’s tweet came nearly four years after the SEC’s Division of Enforcement and Office of Compliance Inspections and Investigations issued a statement that read “[a]a celebrity or other person promoting a virtual token or coin that is a security must disclose the nature, scope and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.”
A representative for Paul did not immediately respond to a request for comment.
The SEC also announced charges against Sun and three of his companies “for the unregistered offering and sale of crypto-asset securities Tronix (TRX) and BitTorrent (BTT).” The commission also said in part that Sun and his companies orchestrated “a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.”
Paul, 26, suffered a split decision loss to Tommy Fury last month, the first defeat of Paul’s boxing career.
Paul rose to fame thanks to his content on Vine, a now-defunct video service, then YouTube, with which he now has more than 20 million followers. In addition to his followers on YouTube and Twitter – now at 4.6 million – he has more than 22 million followers on Instagram.
In addition to Paul and Lil Yachty, actress Lindsay Lohan, adult film star Kendra Lust and music artists Soulja Boy, Austin Mahone, Ne-Yo and Akon are the others facing SEC charges.
