U.S. SEC sues Jake Paul, Lindsay Lohan, Soulja Boy, other celebrities over crypto sales

NEW YORK –

The U.S. Securities and Exchange Commission on Wednesday sued Chinese cryptocurrency entrepreneur Justin Sun, accusing him and different defendants of illegally promoting crypto securities and scheming to artificially inflate buying and selling quantity in crypto belongings.

Beginning round August 2017, Sun and his corporations Tron Foundation Limited, BitTorrent Foundation Limited and Rainberry Inc engaged in a scheme to distribute billions of crypto belongings referred to as Tronix (TRX) and BitTorrent (BTT), the SEC stated. That included using “bounty programs” directing events to advertise the tokens on social media, together with to U.S.-based buyers, the SEC stated.

TRX and BTT have been offered as securities, and thus their sale wanted to be registered with the SEC, the regulator stated in its grievance filed in Manhattan federal courtroom.

The company additionally charged eight celebrities, together with Lindsay Lohan and Jake Paul, for illegally touting these belongings with out disclosing they have been being compensated for it.

Sun additionally violated legal guidelines in opposition to fraud and market manipulation by orchestrating a scheme to inflate obvious buying and selling quantity in TRX within the secondary market by wash buying and selling, the SEC stated. From at the very least April 2018 to February 2019, he allegedly directed workers to have interaction in over 600,000 wash trades of TRX between two accounts he managed. This garnered proceeds of $31 million from unlawful, unregistered presents and gross sales of the tokens, the SEC stated.

The different celebrities charged have been DeAndre Cortez Way (Soulja Boy), Austin Mahone, Michele Mason (Kendra Lust), Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon).

All however Cortez Way and Mahone agreed to pay a complete of greater than $400,00 in disgorgement, penalties and curiosity to settle the fees, with out admitting or denying the SEC’s findings.

Lawyers for the celebrities and Rainberry didn’t reply instantly to requests for remark. A lawyer for Sun couldn’t instantly be recognized.

(Reporting by Chris Prentice and Jonathan Stempel in New York; Editing by Lisa Shumaker)