By The US Securities and Exchange Commission (SEC) has charged Chinese cryptocurrency entrepreneur Justin Sun with fraud for illegally promoting his crypto assets without registering with the relevant authorities. Sun’s companies Tron Foundation, BitTorrent Foundation, and Rainberry were accused of scheming to distribute billions of crypto assets known as Tronix (TRX) and BitTorrent (BTT). Sun was also charged with artificially inflating the trade volume, while the celebrities who promoted TRX and BTT were charged with concealing the fact that they were paid to promote the currency.
Among the celebrities charged were actor Lindsey Lohan, rapper Akon, Soulja Boy, adult film maker Michele Mason, recording artists Ne-Yo and Lil Yachty, and boxer Jake Paul. The SEC said in their complaint that Sun’s activities led to tens of millions of dollars of illegal profit at the expense of other investors. The celebrities agreed to pay more than $400,000 combined to settle the claims, with Lohan giving up the $10,000 she was paid and paying a fine of $30,000.
The SEC has been cracking down on the crypto industry, describing it as a “Wild West” riddled with misconduct. SEC Chair Gary Gensler said in a statement that “This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure.” Last year, reality TV star Kim Kardashian had to pay a fine of $1 million to settle federal charges after she recommended Ethereum Max tokens to her millions of Instagram followers without disclosing that she had been paid to promote the currency.
Many celebrities have used their massive social media influence to promote cryptocurrencies in recent years, but it is illegal to do so without the full disclosure of being paid to promote. In 2020, actor Steven Seagal paid more than $300,000 as part of a settlement with the SEC and was banned from promoting investments for three years. The SEC’s recent crackdown on the crypto industry highlights the importance of proper disclosure and regulation in the fast-growing and often unregulated world of cryptocurrencies.