Actress Lindsay Lohan and influencer Jake Paul have been charged for allegedly partaking in an illegal crypto scheme along with six other celebrities.
The charges from regulators with the U.S. Security and Exchange Commission (SEC) center on crypto asset entrepreneur Justin Sun and three of his companies: Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent).
A statement from the SEC said that Sun and his companies allegedly participated in the “unregistered offer and sale of crypto asset securities” and also”fraudulently manipulated “the secondary market for TRX through extensive wash trading.” Wash trading reportedly involves “the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership, and for orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.”
Both Lindsay Lohan and Jake Paul were charged with “illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation.” The six other celebrities alongside the two were DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), and Aliaune Thiam (Akon).
Jake Paul talks to the media ahead of the fight between Katie Taylor and Amanda Serrano at The Leadenhall Building on February 07, 2022 in London, England. (Warren Little/Getty Images)
Lindsay Lohan and Jake Paul both reportedly agreed to a settlement payment without admitting guilt.
“With the exception of Cortez Way and Mahone, the celebrities charged today agreed to pay a total of more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings,” the SEC said.
SEC Chair Gary Gensler said in a statement that the case represents the kind of “high-risk investors face when crypto asset securities are offered and sold without proper disclosure.”
“As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX,” said Gensler.
“Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets,” he added.