Eight celebrities charged with illegally promoting tokens in case involving Chinese crypto entrepreneur Justin Sun.
Actress Lindsay Lohan, YouTube influencer Jake Paul and several other celebrities have been accused of illegally promoting the cryptocurrencies of a Chinese entrepreneur accused of fraud.
The U.S. Securities and Exchange Commission (SEC) said on Wednesday it had accused Justin Sun of artificially inflating the trading volume of Tronix (TRX) and BitTorrent (BTT) and hiding celebrity payments to promote the tokens.
In its complaint filed with the court, the SEC said that Sun, owner of the Tron Foundation, BitTorrent Foundation and Rainberry companies, directed employees to conduct hundreds of thousands of simultaneous or near-simultaneous purchases and sales of TRX and BTT without real change of ownership. .
The SEC said Sun’s efforts to give the appearance of legitimate trading made it easier to sell TRX while keeping prices stable, generating tens of millions of dollars in illicit profits at the expense of investors.
“This case demonstrates once again the risk investors face when crypto-asset securities are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said in a statement.
Sun did not immediately respond to a request for comment via Twitter.
Lohan, Paul, the rapper Akon, artists Ne-Yo and Lil Yachty and adult actress Michele Mason are said to have pushed crypto investments to their millions of online followers without disclosing that they had been paid.
The six all agreed to pay more than $400,000 in disgorgement, interest and penalties to settle the claims, the SEC said.
Two other celebrities named in the SEC’s indictment, rapper Soulja Boy and pop singer Austin Mahone, have not reached a settlement with the SEC, the agency said.
The SEC issues civil penalties such as fines and does not pursue criminal charges.
US regulators have stepped up scrutiny of cryptocurrencies in the wake of FTX’s stunning collapse and the arrest of its founder Sam Bankman-Fried on fraud charges last year.