May 20. 2024. 12:05

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Lindsay Lohan, Jake Paul among celebrities to settle with SEC over crypto promotion

Actress Lindsay Lohan, Youtuber and boxer Jake Paul and rapper Akon are among several celebrities who have agreed to pay tens of thousands of dollars to settle claims they promoted crypto investments to their millions of social media followers without disclosing they were being paid to do so.

Recording artists Ne-Yo and Lil Yachty and adult film performer Michele Mason also all agreed to pay more than $400,000 (€366,000) combined in disgorgement, interest and penalties to settle the claims, the Securities and Exchange Commission (SEC) said.

None admitted or denied the SEC’s findings as part of the settlement. Two other celebrities named in the complaint, rapper Soulja Boy and pop singer Austin Mahone, did not reach a settlement, the agency said.

In response to a request for comment, Lohan’s publicist Leslie Sloane said the actress was contacted last March, was unaware of the disclosure requirement, and agreed to pay a fine to resolve the matter.

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Lohan, who last week announced she is pregnant, was called to give up the $10,000 she was paid, plus interest, and pay a $30,000 fine, according to an SEC complaint.

A spokeswoman for Paul declined to comment. Emails left with representatives for the other celebrities named in the SEC complaint were not immediately returned.

In the complaint filed by the SEC in a federal court in New York, the agency claims the celebrities were paid to promote Tronix (TRX) and BitTorrent (BTT), both crypto asset securities that were offered for sale by three companies owned by Justin Sun, a Chinese national.

Mr Sun is the permanent representative of Grenada to the World Trade Organisation and may be living in Singapore or Hong Kong, according to the complaint.

Manipulative trading

Starting at around August 2017, Mr Sun allegedly offered to sell billions in the unregistered securities and engaged in manipulative trading, while also creating secondary markets on which Tronix and BitTorrent could be traded, according to the complaint.

“Although the celebrities were paid to promote TRX and BTT, their touts on social media did not disclose that they had been paid or the amounts of their payments,” according to the complaint. “Thus, the public was misled into believing that these celebrities had unbiased interest in TRX and BTT, and were not merely paid spokespersons.”

Many 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 are being paid to do so is illegal, and has landed some big names in hot water with securities regulators.

Last autumn, 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 of Instagram followers without making clear that she was paid to do so.

In 2020, actor Steven Seagal agreed to pay more than $300,000 as part of a similar settlement with the SEC, which also banned him from promoting investments for three years. — AP