The SEC charges Tron founder Justin Sun and 8 celebrities including Lindsay Lohan and Jake Paul in crypto lawsuit
- The SEC sued Tron founder Justin Sun in a lawsuit involving Tronix and BitTorrent crypto tokens.
- It also charged eight celebrities with promoting the tokens without disclosing they were paid.
Federal regulators just sued crypto entrepreneur Justin Sun and three of his companies including Rainberry Inc. and Tron Foundation over how they sold the crypto tokens Tronix and BitTorrent.
Eight celebrities including the actress Lindsay Lohan, YouTuber Jake Paul, and singer Akon were also charged.
In a complaint filed in New York federal court on Wednesday, the US Securities and Exchange Commission accused Sun and the companies of improprieties in how the Tronix or TRX crypto was traded.
The SEC also said the celebrities it charged promoted crypto assets without making it clear they were being paid.
Those celebrities included Lindsay Lohan, Jake Paul, Aliaune Thiam (Akon), Austin Mahone, DeAndre Cortez Way (Soulja Boy), Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), and Shaffer Smith (Ne-Yo).
The agency's civil complaint accused Sun and his companies of multiple securities violations, alleging they drove a celebrity-fueled advertising push while hiding that the celebrities were paid to advertise the crypto assets TRX and BTT, according to its complaint.
The agency said that Sun told an employee at his company "to ensure that those celebrities did not disclose the fact that they were paid to tout the tokens," according to its complaint.
Celebrities involved were paid well for tweets, the agency said. Soulja Boy, for instance, received $10,000 for tweeting about the crypto assets, according to the SEC.
"Thus, the public was misled into believing that these celebrities had unbiased interest in TRX and BTT, and were not merely paid spokespersons," the SEC said in its lawsuit.
The SEC leveled accusations against Sun and his companies including:
- "Unregistered offer and sale of crypto asset securities"
- "Fraudulently manipulating the secondary market for TRX through extensive wash trading"
- "Orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation"
- Selling "TRX and BTT as investments through multiple unregistered 'bounty programs'"
"This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure," SEC chair Gary Gensler said in a statement on Wednesday.
The SEC said that all of the celebrities charged, except for Mahone and Soulja Boy, had agreed to pay over $400,000 in total to settle the charges without denying or admitting to them.
Sun and representatives for Tron and Rainberry could not immediately be reached for comment ahead of publication.
A representative for Lohan told Insider in a statement that the actress "was unaware of the disclosure requirement."
"She agreed to pay a fine to resolve the matter," the representative said.
Insider did not immediately receive comment from the other charged celebrities it contacted ahead of publication.
- Financial inclusion made easy for India’s small merchants with Paytm’s pioneering QR codes and Soundbox
- A 24-year-old stock trader who made over $8 million in 2 years shares the 4 indicators he uses as his guides to buy and sell
- My fiancé and I picked out my engagement ring together before he proposed, and I don't regret missing out on the surprise
- Two Mukesh Ambani-owned companies are among India’s top 5 valuable brands
- TVS, Ather, Ola hike prices of electric two-wheelers as new subsidy norms kick in
- IKIO Lighting sets IPO price band at ₹270-285/share
- Royal Enfield sales rise 22% in May at 77,461 units
- GST collection rises 12% to ₹1.57 lakh crore in May