The Securities and Exchange Commission has a message for celebrities eyeing paid deals to promote cryptocurrencies: Disclose you’re getting paid, or else.
The SEC revealed on Wednesday that it had charged eight celebrities, including actress Lindsay Lohan, influencer Jake Paul, rappers Lil Yachty and Soulja Boy, singers Akon and Ne-Yo, and more for promoting the tronix (TRX) and bitTorrent (BTT) tokens on social media but not revealing they had been paid for doing so, which is illegal. The regulator claims the celebrities were paid by Justin Sun, the founder of the Tron blockchain, who provided them with specific text to promote the tokens and instructed them not to disclose their compensation.
“Exploring #DeFi and already liking $JST, $SUN on $TRX. Super fast and 0 fee. Good job @justinsuntron,” Lohan said in a tweet in February of 2021, for which she was paid $US10,000 by Tron through an intermediary, the SEC said.
Sun didn’t escape SEC scrutiny, either. The agency charged him and his companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., with offering and selling unregistered crypto assets. The SEC also accused Sun and his companies of engaging in “wash trading,” a process during which individuals buy and sell a security almost simultaneously to make it appear actively traded, and for organising a “celebrity touting campaign” and lying to conceal it.
Gurbir Grewal, director of the SEC’s division of enforcement, said in a statement that the agency was neutral about the technologies in the case, but stressed that this was a matter of investor protection.
“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,” Grewal said. “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.”
In a statement on Twitter, Sun, who identifies himself as “His Excellency,” likely because he serves as Grenada’s permanent representative to the World Trade Organisation, said the SEC’s claims lacked merit.
“It is no secret that the SEC’s regulatory framework for digital assets is still in its infancy and is in need of further development,” Sun said. “We are eager to collaborate with governments and regulatory bodies globally that are dedicated to establishing transparent guidelines for regulating and working with the cryptocurrency industry given the important role it can play.”
The other celebrities charged were Austin Mahone and Michele Mason (Kendra Lust). Lohan and five of the other celebrities charged agreed to pay more than $US400,000 combined in disgorgement, interest, and penalties to settle the charges, the SEC announced. Their settlement does not constitute an admission or denial of guilt. Only Soulja Boy and Mahone didn’t settle with the agency.
Click through to learn more about how the celebrities promoted Sun’s cryptocurrencies and how much they were paid.
Jake Paul: Paid $US25,019 for Twitter Promotion of TRX
In its complaint against Paul, the SEC stated that the influencer was paid $US25,019 in crypto assets by Tron and Sun for promoting TRX with on Twitter in February of 2021. His tweet was simple: “#TRX 🚀 @justinsuntron” and included a quote tweet that was no longer available.
Soulja Boy: Paid $US10,000 for Twitter Promotion of TRX
Soulja Boy is one of two celebrities that didn’t settle his allegations of illegal promotion with the SEC. The agency states that Soulja Boy tweeted about TRX twice in January of 2021.
The first tweet on Jan. 22 read: “thanks guys, bought some … TRX … 💪 what’s next? let’s go ✔.”
On Jan. 29, Soulja Boy tweeted once more: “✔$trx =fast blockchain.”
Austin Mahone: Paid $US20,059 for Twitter Promotion of TRX and BTT
Mahone, who like Soulja Boy did not settle with the SEC, was paid $US20,059 for one tweet on Feb. 12, 2021, as stated by the SEC. The tweet read: “When $TRX hits 50 cents and $BTT hits 1 cent I’m getting a tattoo of @justinsuntron’s face.”
Kendra Lust: Paid $US955 for Twitter Promotion of TRX
According to the SEC, Lust posted the following to Twitter on Feb. 11, 2021: “people should use only $TRX cause it’s fast, cheap and hot 🔥 even PornHub likes it😏 thanks @justinsuntron.”
Tron paid Mason $US955 for the tweet through an intermediary.
Lil Yachty: Paid $US10,000 for Twitter Promotion of TRX
Lil Yachty’s promotion of TRX earned him $US10,000 from Tron, which paid him through an intermediary, the SEC stated. On Feb. 11, 2021, the artist said: “Getting #TRX tattoo when it hits 50 cents. @justinsuntron.”
Ne-Yo: Paid $US12,000 for Twitter Promotion of TRX
Ne-Yo was paid $US12,000 for promoting TRX in a tweet in February of 2021 and also paid by Tron via an intermediary. The tweet read: “What’s an ideal crypto bag? Thinking $TRX $BTT $JST $SUN $WIN”
Akon: Paid $US42,000 for Twitter Promotion of TRX
The person who was paid the most to promote TRX was Akon, who received a whopping $US42,000 in crypto from Tron for promoting TRX through an intermediary. His tweet was as follows:
“hearing a lot about #TRX @justinsuntron hit me up,” Akon said on Feb. 13. 2021.
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