Lindsay Lohan, Jake Paul Among 8 Celebs Named In Alleged Crypto Scheme
Eight celebrities including actor Lindsay Lohan and YouTuber-turned-boxer Jake Paul were slapped with an official complaint accusing them of promoting cryptocurrencies without disclosing they were paid to do so.
The Securities and Exchange Commission allegations are part of the federal agency’s larger enforcement action against cryptocurrency mogul Justin Sun and three of his companies: Iron Foundation Ltd., BitTorrent Foundation Ltd. and Rainberry Inc.
The celebs posted on social media about Sun’s Tronix and BitTorrent crypto securities “without disclosing that they were compensated for doing so and the amount of their compensation,” the SEC said in a press release.
The celebrities include Lohan, Paul, rapper Lil Yachty, singer-songwriter Austin Mahone, rapper Soulja Boy, porn actor Kendra Lust, singer-songwriter Ne-Yo and singer Akon. Six of them have agreed to pay more than $400,000 in combined penalties without admitting or denying the allegations, according to the SEC. Mahone and Soulja Boy are the only two who haven’t yet agreed to settle, the agency said.
HuffPost has reached out to all eight stars for comment.
“Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” Gurbir Grewal, director of the SEC’s enforcement division, said in the statement.
“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 added.
Sun blasted the enforcement action in a Twitter post on Wednesday.
“The SEC’s civil complaint earlier today is just the latest example of actions it has taken against well known players in the blockchain and crypto space,” he wrote. “We believe the complaint lacks merit, and in the meantime will continue building the most decentralized financial system.”
Some of the evidence supporting the SEC allegations was still online as of Thursday morning, including a February 2021 tweet in which Lohan tagged Sun and promoted crypto assets including Tronix. According to the SEC order obtained by BuzzFeed News, Lohan was fined a total of $40,670.
Exploring #DeFi and already liking $JST, $SUN on $TRX. Super fast and 0 fee. Good job @justinsuntron
— Lindsay Lohan (@lindsaylohan) February 11, 2021
A representative for Lohan told the outlet she was contacted in March 2022 and didn’t know she had to disclose her payment. The specific sums owed by the other five celebrities who settled remains unclear.
Paul, who recently pivoted from YouTube influencer to professional boxer, has since deleted a tweet from the same time period in which he mentioned Tronix with a hashtag before adding a rocket ship emoji. Like Lohan, he didn’t disclose his compensation.
“Getting a #TRX tattoo when it hits 50 cents. @justinsuntron,” wrote Lil Yachty in a since-deleted tweet from November 2021, per BuzzFeed News.
Sun, meanwhile, is accused of the fraudulent act of wash trading — in which a security is falsely made to appear like it’s being actively and successfully traded. The SEC alleges he accomplished this by having famous figures tout the currencies on social media, which manipulated the markets.
“Sun and his companies not only targeted U.S. investors in their unregistered offers and sales … but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX,” SEC Chair Gary Gensler said in the press release.
This isn’t the first time celebrities have faced allegations that they participated in crypto schemes. Kim Kardashian settled for $1.26 million for hyping a currency called EMAX. And Tom Brady and Larry David are among several celebrities named in a class action for promoting FTX, the crypto exchange that collapsed in November.
Celebrities routinely embrace branding deals and partnerships, from fashion and tech to liquor. But some endorsements, like for cryptocurrencies, come with extra rules meant to protect consumers.
“This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used,” Grewal said.