Lindsay Lohan, Akon and Jake Paul among celebrities charged over crypto promotion

Lindsay Lohan and Jake Paul were among the celebrities charged. Credit: AP

Eight celebrities, including Lindsay Lohan, Akon, Ne-Yo and Jake Paul, have been charged by US regulators over allegedly "illegally touting" crypto asset securities.

The US Securities and Exchange Commission (SEC) claims the celebrities used their social platforms to boost crypto tokens without disclosing they were being compensated.

The other celebrities charged were rapper DeAndre Cortez Way (Soulja Boy), singer Austin Mahone, adult film star Michele Mason (Kendra Lust) and rapper Miles Parks McCollum (Lil Yachty).

All but Soulja Boy and Mahone agreed to pay a total of more than $400,000 to settle the charges, without admitting or denying the SEC’s findings.

Meanwhile, Justin Sun, a crypto asset entrepreneur, was accused of illegally selling crypto securities and scheming to artificially inflate trading volume in crypto assets.

Chinese cryptocurrency entrepreneur Justin Sun.

What do the SEC filings allege about the celebrities' social media promotions?

  • Lindsay Lohan

Lohan, who is best known for her role in the 2004 film Mean Girls, promoted the TRX offering on social media by tweeting on February 11, 2021:

"Exploring #Defi and already liking $JST, $SUN on $TRX. Super fast and 0 fee. Good job @justinsuntron"

Tron, through an intermediary, paid Lohan $10,000 for this promotion and provided her with the specific language to include in the Tweet, the SEC filing states.

The actress did not disclose that she had been paid by Tron, or the amount of compensation she received from Tron and Sun for promoting the TRX offering on Twitter, it was claimed.

According to the documents, she wad ordered to pay $30,000 in penalties.

  • Jake Paul

Paul, a well-known US boxer and YouTuber, promoted the TRX offering on Twitter, the filing states.

"In February 2021, Paul promoted a crypto asset security on Twitter in exchange for a payment of crypto assets, valued at approximately $25,019. Paul, at the time of his promotion, had approximately 3.8 million Twitter followers."

He was ordered to pay more than $100,000.

According to the SEC, Sun and his companies Tron Foundation Limited, BitTorrent Foundation Limited and Rainberry Inc engaged in a scheme to spread billions of crypto assets known as Tronix (TRX) and BitTorrent.

That included the deployment of so-called "bounty programs" directing interested parties to promote the tokens on social media, the SEC said.

“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” SEC Chair Gary Gensler said in a press release published on Wednesday.

“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, added.

“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."

A number of celebrities and athletes have used their influence and massive social media followings to promote cryptocurrencies in recent years, including Matt Damon, Tom Brady and Reese Witherspoon.

But doing so without disclosing when they're being paid to do so is illegal, and has landed some big names in hot water with securities regulators.

Last year, Kim Kardashian agreed to pay a $1 million fine to settle federal charges that she recommended Ethereum Max tokens, a crypto security, to her millions Instagram followers without making clear that she was paid to do so.

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