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- SEC Sues Eight Stars over Unlawful Crypto Promotion
Deyan Dimitrov March 23, 2023 3 min read
SEC Sues Eight Stars over Unlawful Crypto Promotion
Jake Paul and several other implicated celebrities agreed to settle for $400,000 but did not admit to or deny the charges
On Wednesday, the US Securities and Exchange Commission (SEC) charged eight celebrities with the illegal promotion of Tronix (TRX) and BitTorrent (BTT) crypto tokens. The defendants allegedly used their social media presence to promote crypto investments to millions of followers without disclosing they were getting paid for their services. So far, six stars have opted to settle with the SEC, but none have commented on the matter.
Advertising Crypto Carries Certain Restrictions
The SEC continues to crack down on crypto in their ongoing mission to bring a semblance of order to the industry after the colossal crash of FTX. Their latest target is Yuchen “Justin” Sun, who used three of his companies to sell Tronix (TRX) and BitTorrent (BTT) crypto tokens, allegedly without the required registration.
Sun reportedly contacted several celebrities, offering them a substantial sum of crypto assets in exchange for social media promotions. However, the stars that took Sun on his offer missed mentioning they were getting paid, which violates SEC regulations. The Commission took notice of this problem several years ago and imposed restrictions on crypto-minded influencers.
Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange…SEC Office of Compliance Inspections and Examinations statement
Despite the SEC’s attempts to curtail illegal crypto advertisements, many celebrities have tried to circumvent the regulations for a quick profit, often drawing the Commission’s ire. Kim Kardashian and Steven Seagal were two of the most noteworthy examples, receiving fines of $1 million and $300,000 for promoting investments without making it clear they got paid.
Most Celebrities Managed to Reach a Settlement
Learning from other people’s mistakes seems like a skill that eight other stars are sorely lacking. On 12 February 2021, Youtuber turned MMA fighter Jake Paul replied to a tweet by rapper Lil Yachty as they promoted Tronix (TRX) tokens. Both celebrities missed mentioning they were receiving compensation. Paul allegedly got $25,019 in crypto assets for his services.
The offer likely looked like a sweet deal for Paul and Lil Yachty then, but the consequences appear to have caught up with them. Both agreed to pay back what they received, plus interest and a substantial fine. The SEC also charged six other stars on similar grounds. Recording artists Ne-Yo and Akon, actress Lindsay Lohan, and adult film performer Michele Mason agreed to pay up, while singer Austin Mahone and rapper Soulja Boy failed to settle.
The implicated celebrities will pay over $400,000 combined, but none admitted or denied the SEC’s charges. Overall, they got out relatively scot-free compared to previous similar cases. The Commission’s actions have at least made it clear that status and fame won’t protect celebrities choosing to skirt crypto laws in exchange for a quick buck.
Deyan is an experienced writer, analyst, and seeker of forbidden lore. He has approximate knowledge about many things, which he is always willing to apply when researching and preparing his articles. With a degree in Copy-editing and Proofreading, Deyan is able to ensure that his work writing for GamblingNews is always up to scratch.
Blockchain March 23, 2023