SEC Charges Lindsay Lohan, Soulja Boy For Touting Crypto
Lindsay Lohan, Jake Paul and Soulja Boy are among several celebrities charged by the Securities and Exchange Commission with illegally touting cryptocurrency assets on social media without disclosing they were paid to do so.
The SEC also charged “crypto asset entrepreneur” Justin Sun with the sale of unregistered crypto asset securities Tronix (TRX) and BitTorrent (BTT) through three companies, including Tron Foundation Limited, BitTorrent Foundation and Rainberry. The commission also charged Sun with manipulating the market to make it appear his assets were being actively traded.
Sun used “an age-old playbook” by offering investors unregistered securities and then manipulating the market for those securities, according to a statement by SEC Enforcement Division Director Gurbir S. Grewal.
“At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” he said. “This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
In addition to being the founder of the aforementioned companies, the 32-year old Sun is currently the Permanent Representative of Grenada for the World Trade Organization and is believed to be in Singapore or Hong Kong, according to the SEC complaint filed today in federal court in New York.
His scheme began in 2017, when he started touting his crypto assets to investors. Between March 2018 and February 2019, Sun sold more than 542 million TRX to investors, including several who placed their orders while in the U.S., raising nearly $32 million during that time. During this time, Sun never registered TRX (nor BTT) with the SEC.
Sun would allegedly sell the unregistered crypto through “bounty programs,” which would drive investors to promote the tokens on social media, recruit others to Tron-related Telegram and Discord channels and create accounts in exchange for crypto distributions. In one case, Sun promoted an “emoji contest,” asking users to create a post using a Tron emoji and uploading them to social media.
“Friends tagged in the winning submissions would also receive TRX, with 4,000 TRX to be shared equally by the ten friends of the first place winner, and 100 TRX to be distributed to each of the ten friends tagged by the five runners-up,” the complaint read.
Sun also engaged in “wash trading,” which involves manipulating markets through simultaneously purchasing and selling securities to make them seem actively traded, without any actual change in the security’s “beneficial ownership,” according to the SEC.
In addition to Lohan and Paul, the commission also settled charges with Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon), all of whom had significant social media followings. DeAndre Cortez Way (known as Soulja Boy) and songwriter Austin Mahone were included in the charges against Sun.
In Paul’s case, the often controversial social media personality took to Twitter in February 2021 touting a crypto offer by Sun through the Tron Foundation.
“Tron, through an intermediary, paid Paul in crypto assets, valued at approximately $25,019, for this promotion and provided Paul with the specific language to include in the Tweet,” the order read. “Paul did not disclose that he had been paid by Tron, or the amount of compensation he received from Tron and Sun for promoting the TRX offering on Twitter.”
Others were paid in cash in return for their social media promotion; Lohan was paid $10,000 to tout the crypto assets on Twitter, according to her order. The six celebrities who settled with the commission agreed to collectively pay more than $400,000.