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SEC charged on Lindsay Lohan and other celebrities for illegally promoting crypto

They failed to disclose that they were receiving compensation for promoting Justin Sun’s Tronix and BitTorrent tokens.

The Securities and Exchange Commission (SEC) has taken action against crypto entrepreneur Justin Sun, charging him with the unregistered sale and offer of Tronix and BitTorrent tokens. These tokens were promoted on social media by several celebrities, who are now also facing charges by the SEC. The agency alleges that eight celebrities, such as Lindsay Lohan, Jake Paul, Soulja Boy, Ne-Yo, and Akon, unlawfully promoted the tokens online without disclosing that they received payment for doing so. These tokens are well-known even among non-hardcore crypto enthusiasts due to the celebrities’ endorsements.

“…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,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a statement.

Except for Soulja Boy and Austin Mahone, all charged celebrities have agreed to pay a total of $400,000 in penalties to resolve the charges. This is not the first time that the SEC has taken action against celebrities promoting cryptocurrency on social media. Previously, the agency charged Kim Kardashian and NBA Hall of Famer Paul Pierce for endorsing EthereumMax’s EMAX tokens without disclosing that they were paid for it. Kardashian and Pierce paid $1.26 million and $1.4 million, respectively, to settle the charges against them.

The SEC has accused Justin Sun of violating antifraud and market manipulation provisions of federal securities laws. The agency alleges that Sun offered the tokens as investments through unregistered bounty programs that incentivized participants to promote the tokens on social media and recruit others. Furthermore, the SEC accused Sun of instructing his employees to artificially increase the value of Tronix by selling and buying the token simultaneously to create an illusion of high trading activity.

“As alleged in the complaint,” Grewal said, “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.”

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