The Securities and Exchange Commission on Wednesday announced charges against crypto entrepreneur Justin Sun and celebrity backers of his crypto asset companies Tronics (TRX) and BitTorrent (BTT).
The SEC has filed charges against Sun and his company for the unregistered offering and sale of crypto asset securities. The commission charged the eight celebrities with “illegally alleging to TRX and/or BTT that they received compensation for doing so and the amount of their compensation,” it said in a press release.
The list of eight celebrities facing charges includes actress Lindsay Lohan, social media personality Jake Paul and rappers Soulja Boy and Lil Yachty.
The SEC is accusing Sun and his companies of “orchestrating a scheme to get celebrities to tout TRX and BTT without disclosing their compensation.”
Edwin Ku/Bloomberg via Getty Images
With the exception of Soulja Boy and singer Austin Mahone, the accused celebrities on Wednesday agreed to pay a total of more than $400,000 in interest and penalties to settle the charges, without admitting or denying the SEC’s findings, according to the commission’s press release.
According to the SEC, the celebrity campaign occurred because Sun and his companies “fraudulently manipulated the secondary market for TRX through extensive wash trading, which involves simultaneous or near-simultaneous buying and selling of a security so that it appears to be actively traded.” Actual Change of Beneficial Ownership.”
SEC Chairman Gary Gensler said the charges highlight risks for investors if companies don’t promise proper disclosure.
“Sun and his companies not only targeted their unregistered offers and sales to US investors, generating millions in illegal income at the expense of investors, but they coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX,” Gensler said. “Sun further enticed investors to buy TRX and BTT by running a promotional campaign where he and his celebrity promoters hid the fact that celebrities were being paid for their tweets.”
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