Celebrities Allegedly Boosted Crypto Tokens without Disclosing Paid Promotion
The US Securities and Exchange Commission (SEC) has charged eight celebrities, including Lindsay Lohan and Jake Paul, with participating in an illegal crypto scheme. The stars allegedly used their social media platforms to promote TRX and BTT crypto tokens without disclosing they were being paid to do so.
Illegal Promotion of Crypto Tokens
The SEC alleged that the group unlawfully promoted TRX and BTT cryptocurrency assets by using their substantial social media followings to advertise them without revealing their compensation details. The celebrities are accused of not disclosing their paid promotion of the tokens.
The other celebrities charged in the scheme include musician Soulja Boy, singer Austin Mahone, porn actress Kendra Lust, rapper Lil Yachty, musician Ne-Yo, and Senegalese-American singer Akon.
Manipulation of Trading Activity
Crypto investor Justin Sun is also accused of fraud by manipulating the trading activity of the two tokens to create the appearance of active trading. Sun, who was mentored by Jack Ma, the founder of Alibaba, is well-known for having paid $4.6 million to dine with investor Warren Buffett. As part of the scheme, charges were also brought against his companies, namely Tron Foundation Limited, BitTorrent Foundation Ltd, and Rainberry Inc (previously known as BitTorrent).
“High Risk” for Investors
According to SEC Chair Gary Gensler, this case serves as another example of the significant risks that investors face when cryptocurrency securities are sold without adequate disclosure. Sun and his companies not only focused on US investors in their unregistered sales, earning millions of illegal proceeds at investors’ expense, but they also engaged in wash trading on an unregistered platform to fabricate the false impression of active trading.
Settlement without Admitting Guilt
Except for Soulja Boy and Mahone, all of the celebrities charged have collectively paid over $400,000 to settle the allegations. Lindsay Lohan, who urged her 8.4 million Twitter followers to invest in the tokens, is a Dubai resident according to charging documents, and paid a $10,000 settlement fee to the SEC along with an additional $30,000 in penalties. Meanwhile, YouTuber, boxer, and Puerto Rico resident Jake Paul was instructed to pay over $100,000.
Warning to Investors
The SEC’s charges and the celebrities’ settlements serve as a warning to investors about the potential risks of investing in cryptocurrency without proper disclosure. The SEC has consistently warned investors about the high risks associated with investing in crypto assets, especially when proper disclosure is not provided.
Conclusion
In conclusion, the charges brought against eight celebrities for their participation in an illegal crypto scheme highlights the importance of proper disclosure when it comes to promoting cryptocurrency. The celebrities’ actions not only misled investors but also put them at risk. The settlement payments made by the celebrities serve as a warning to other investors about the potential risks of investing in crypto assets without proper disclosure. As the SEC continues to warn investors about the high risks associated with investing in crypto assets, it’s important to do thorough research and seek professional advice before investing in the market.
Disclaimer
The information presented in this Blogpost is solely for educational and informative purposes and should not be misconstrued as investment, financial or legal advice. Cryptocurrencies are a highly unstable and speculative market and their worth is susceptible to substantial fluctuations. Therefore, it is advisable to conduct personal research and seek counsel from qualified experts before making any financial decisions.
