The US Security and Exchange Commission has charged Jake Paul, Soulja Boy, and other celebrities for illegally promoting cryptocurrency on their platforms.
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In a press release on Wednesday, the SEC issued charges against Tron Foundation owner Justin Sun along with Jake Paul, Soulja Boy, and six other celebrities for “illegally touting” tokens on their platforms, as reported by Dexerto. The other celebrities listed in the press release were Lil Yatchy, Lindsay Lohan, Ne-Yo, Akon, and Austin Mahon, which accused them of promoting the tokens on their platforms without disclosing that they were compensated for it.
“The SEC also charged Sun and his companies with fraudulently manipulating the secondary market for TRX through extensive wash trading, which 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.”
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“The SEC simultaneously charged the following eight celebrities for illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation,” the release continued. Paul reportedly agreed to pay more than $400,000 in disgorgement, interest, and penalties.
SEC Chair Gary Gensler said in a statement that the case reveals how risky it is for investors to look into cryptocurrency when the assets are being sold without the proper protocols.
“This case demonstrates again 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.”
Sun was also accused of violating the antifraud and market manipulation provisions of the federal sercurity laws by conducting a scheme to inflate the trading volume of TRX.
“From at least April 2018 through February 2019, Sun allegedly directed his employees to engage in more than 600,000 wash trades of TRX between two crypto asset trading platform accounts he controlled, with between 4.5 million and 7.4 million TRX wash traded daily. This scheme required a significant supply of TRX, which Sun allegedly provided. As alleged, Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token.”
Social media users were reportedly stunned by the list of celebrities as it was unexpected that they would be charged by the SEC.
not Lindsay Lohan being involved in this flop lmao https://t.co/glgqDBRJW2
— Josh (@CactiJosh) March 23, 2023
Hopefully ordinary people aren’t making investment or purchasing decisions based on celebrity affiliation with any product. https://t.co/kGShcChpO9
— Kelly Blokdijk (@TalentTalks) March 23, 2023
— Rocket Punch ㊙ (@RocketPunch1221) March 23, 2023
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