Actress Lindsay Lohan and YouTuber turned boxer Jake Paul are among a list of celebrities who had to pay tens of thousands of dollars to settle claims they illegally promoted cryptocurrencies.
The list includes rappers Soulja Boy and Lil Yachty, singers Ne-Yo, Akon and Austin Mahone, and adult film actress Kendra Lust.
In a complaint filed by the Securities and Exchange Commission (SEC), the celebs were accused of illegally touting the crypto tokens Tronix (TRX) and BitTorrent (BTT) without disclosing that they were being paid to do so.
With the exception of Soulja Boy and Mahone, all agreed to pay a combined $400,000 to settle the charges against them, without admitting or denying guilt.
“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” said SEC Chair Gary Gensler.
It adds to the long list of celebrities who have been caught up in regulations that require full disclosure by those who are paid to promote financial products.
Last year, Kim Kardashian was fined $1 million by the SEC for promoting a crypto security to her 330 million Instagram followers, again without clearly stating she was paid for the post.
What's next for crypto?
Crypto keeps evolving since Bitcoin’s inception in 2009. Estimates show there are roughly 20,000 different digital tokens, coins and currencies today.
The SEC complaint filed Thursday also charged Chinese diplomat Justin Sun and his three crypto companies with fraud and securities violations.
Sun was accused of orchestrating the celebrity campaign, as well as using his companies to wash trade TRX and BTT.
Wash trading occurs when a person simultaneously buys and sells the same asset to create the illusion of market activity or trading volume. It's considered market manipulation because it can mislead investors into thinking there's more market demand than actually exists.
Sun was also accused of generating more than $31 million from illegally selling TRX in the secondary market.
"Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities," said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
