YouTube star Jake Paul among those fined for promoting cryptocurrency on social media without revealing payment
- Actress Lindsay Lohan and rapper Akon were also ordered to pay fines after they failed to state they were paid to promote crypto assets Tronix and BitTorrent, which is illegal
- Many celebrities have used their influence to promote cryptocurrencies, including Kim Kardashian, who was fined US$1 million for her failure to disclose
Actress Lindsay Lohan, YouTuber Jake Paul and six other celebrities were charged by the US Securities and Exchange Commission for promoting cryptocurrencies on social media without disclosing that they were paid to do so. Photo: AFPYouTube personality Jake Paul, actress Lindsay Lohan, rapper Akon and several other celebrities 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.
Paul, Lohan, Akon, and recording artists Ne-Yo and Lil Yachty were among the celebrities who all agreed to pay more than US$400,000 combined in disgorgement (money made from an illegal act), interest and penalties to settle the claims, the Securities and Exchange Commission (SEC) said on Wednesday.
The SEC is an agency under the US government that works to prevent fraud and market manipulation.
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None admitted or denied the SEC’s findings as part of the settlement. Two other celebrities named in the SEC’s complaint, rapper Soulja Boy and pop singer Austin Mahone, did not reach a settlement with the SEC, the agency said.
In the complaint filed by the SEC in 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. Sun is the permanent representative of Grenada to the World Trade Organization and may be living in Singapore or Hong Kong, according to the complaint.
Starting at around August 2017, 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.
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“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.”
In response to a request for comment, Lohan’s publicist Leslie Sloane said the actress was contacted in March 2022, was unaware of the disclosure requirement, and agreed to pay a fine to resolve the matter. Lohan, who announced she was pregnant last week, was called to give up the US$10,000 she was paid, plus interest, and pay a US$30,000 fine, according an SEC complaint.
A spokeswoman for Paul declined to comment. Emails left with representatives for the other celebrities named in the SEC complaint weren’t immediately returned Wednesday.
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’re being paid to do so is illegal, and has landed some big names in hot water with securities regulators. Last fall, Kim Kardashian agreed to pay a US$1 million fine to settle federal charges that she recommended Ethereum Max tokens, a crypto security, to her millions Instagram followers without making clear that she was paid to do so.