Never been a better time to be a person with literally zero investment in crypto!
The SEC announced Wednesday that "crypto asset entrepreneur Justin Sun" was charged with the unregistered offer and sale of crypto asset securities. Caught in the crossfire of the charges are an unsurprising lot of celebrities, including Lindsay Lohan, Jake Paul, Soulja Boy, Austin Mahone, Lil Yachty, Ne-Yo and Akon.
Of the charges, the SEC wrote that the celebs in question illegally touted "TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation."
The government also claimed Sun "fraudulently" manipulated the market to make it appear as though his assets were being "actively traded," despite no "change in beneficial ownership." To do so, he would buy and then sell his assets in what's called a "wash trading scheme." In simpler terms, It's illegal.
Interestingly, the SEC detailed how his scheme with the above celebrities played out:
“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. 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 allegation that Lohan and others were directed to not disclose their compensation for the crypto is a damning one. Besides Mahone and Soulja Boy, the others agreed to pay more than $400,000 in disgorgement, interest and penalties to settle with the SEC. In return for the settlement, they don't have to admit or deny any of the charges listed.
This isn't the first run-in celebs have had with enforcement officials for crypto obfuscation. In October, the SEC charged Kim Kardashian in a similar scheme that involved EthereumMax, which resulted in a $1.26 million penalty. At the time, the Director of the Division of Enforcement at the SEC said, "Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information." Likewise, they urged potential victims to not "make investment decisions based solely on the recommendations of a celebrity or influencer."
Photo via Jamie McCarthy/Getty
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