Mar 23, 2023 at 06:47The Securities and Exchange Commission (SEC) accused actress Lindsay Lohan and seven other celebrities of illegally promoting cryptocurrencies. They allegedly promoted Tronix (TRX) and BitTorrent (BTT) tokens without saying what they were paid or how much. Let’s take a look at some of the details of the scandal that is currently gaining momentum.
What happened: The SEC’s report
The charge is part of an ongoing investigation into entrepreneur Justin Sun and his three companies: Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. As a reminder, the businessman is accused of allegedly illegally promoting and selling securities in Tronix and BitTorrent digital assets.
The SEC stated in a release that charges were filed against eight celebrities at once. They are alleged to have received money from Justin Sun for promoting TRX and BitTorrent tokens without disclosing the receipt of the remuneration or the amount of compensation.
As for Justin Sun, the SEC says he is accused of orchestrating a scheme to artificially increase the apparent volume of TRX token trading on the secondary market. More than 600K fake trades are believed to have been made this way on behalf of the businessman. And from illegal, unregistered offers and secondary market sales of TRX, Sun allegedly raised $31M.
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According to SEC Chairman Gary Gensler, this case again demonstrates the 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. 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 said.
List of stars involved in the charge
Among the celebrities who illegally promoted cryptocurrencies are:
- Actress Lindsay Lohan
- Professional boxer Jake Paul
- Rapper Soulja Boy
- Singer and song writer Austin Mahone
- Pornographic porn actor Kendra Lust
- Rapper Lil Yachty
- Singer and songwriter Ne-Yo
- Singer Akon
The investigation materials, which File411 experts detailed, say that, for example, Lindsay Lohan promoted the security of crypto assets on Twitter in February 2021. Allegedly, she received $10K from the issuer for doing so. At that point, the star had about 8.4M followers on Twitter.
Ne-Yo was distributing cryptocurrency despite an SEC warning letter.
Shaffer Smith (Ne-Yo) the SEC sent warning letters yet he still promoted this dubious cryptocurrency https://t.co/QmfnlpA2W9
“Smith’s crypto asset security promotion occurred after the Commission warned in its July 25, 2017, DAO Report of Investigation that digital tokens or… pic.twitter.com/DfbgtPtH3A— File411 (@File411) March 22, 2023
On Feb. 11, 2021, the filmmaker and Internet personality known as Kendra Lust also advertised on social media the reliability of crypto-assets, for which she also received money. However, she did not disclose this or the amount of compensation, which, according to the SEC, is a violation of the law.
Lil Yachty also received $10K for a text tweet promoting token security. Moreover, according to the statement, the artist even received a ready-made text to post. However, he later deleted the tweet.
Jake Paul was ordered to pay $25,019 in restitution, a prejudgment interest of $1811, and a $75,057 fine after the order went into effect.
Akon must pay even more. Within 20 days of the order going into effect, the singer will have to pay the SEC $42K in back pay, prejudgment interest of $2,814, and a $126,000 fine.
Everyone except Soulja Boy and Austin Mahone agreed to pay a total of more than $400K in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings.
However, some users are apparently not satisfied with the fact that stars can get away with just paying a fine, so they demand the introduction of more serious penalties.
It is past time to put @lindsaylohan and @jakepaull in prison for their crimes against the blockchain. They must apologize and serve their sentences along with Sam Bankman-Fried. https://t.co/6bJBTAjMtH
— @amuse (@amuse) March 22, 2023
How did the news affect TRX and BTT?
On March 23, the whole market is in a slight decline. TRON (TRX) clearly stands out compared to other cryptocurrencies. According to CoinMarketCap, TRX was among the top 100 digital assets by market capitalization, falling 7,12% to $0.06269 in the last 24 hours. The price was probably affected by the news of a number of celebrity allegations related to the token.
You have not selected any currency to displayThe BitTorrent (BTT) token was slightly less, but also in the red zone. So, at the moment of writing, the asset is trading at $0.000000154, which is 2,19% less than the day before.
And if the stars have already made enough money from the token advertisement to cover even the fine, the investors who trusted them have a chance to lose their money. That’s why celebrities’ “financial advice” is no guarantee of quality. The only person you can trust in the cryptocurrency market is yourself. Good luck!
If you out here taking financial advice from Lindsay Lohan and Jake Paul, you deserve every chapter of the bankruptcy book. pic.twitter.com/p2JeJ5vmzs
— Travon (@Travon) March 23, 2023
You can also read our article about the SEC’s lawsuit against Ripple, on which the verdict is likely to be announced very soon.
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