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Eight celebrities, including actor Lindsay Lohan, influencer Jake Paul and rapper Soulja Boy, have been charged by federal regulators with illegally touting two cryptocurrencies and failing to disclose they were paid to do it.
The two cryptocurrencies, Tronix (TRX) and BitTorrent (BTT), were sold by crypto entrepreneur Justin Sun, who was also indicted by the Securities and Exchange Commission on Wednesday.
Sun and three of its wholly owned companies – Tron Foundation Limited, BitTorrent Foundation Ltd. and Rainberry Inc. – are charged with the unregistered offering and sale of crypto asset securities and manipulating the secondary market through “wash trading,” which is the rapid buying and selling of cryptocurrencies to give the impression that they are actively exchanged.
The SEC also said Sun and the companies paid celebrities with social media followings to hype TRX and BTT and ordered them not to publicly disclose their compensation.
“This case further demonstrates the elevated risk investors face when securities of crypto assets are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said in a statement.
The other celebrities charged in the scheme are:
- Austin Mahon
- Michele Mason (known as Kendra Lust)
- Miles Parks McCollum (known as Lil Yachty)
- Shaffer Smith (known as Ne-Yo)
- Aliaune Thiam (known as Akon)
Each of the eight is accused of illegally claiming one or both titles.
Six of the celebrities — excluding Soulja Boy (whose legal name is DeAndre Cortez Way) and Mahone — agreed to pay a total of more than $400,000 to settle the charges without admitting or denying the SEC’s findings.
NPR reached out to reps for each of the celebrities with a request for comment, but did not immediately receive a response from seven of the eight. A rep for Jake Paul declined to comment.
The meteoric rise in popularity of crypto has led to a surge of celebrities plugging in various digital currencies, but regulators’ interest in unearthing illegal behavior in the crypto market has landed many of these stars in legal trouble.
In October, the SEC accused Kim Kardashian of using her Instagram account to tout a cryptocurrency without disclosing that she was paid to promote it.