Eight celebrities have been charged with illegally promoting tokens in a case involving Chinese crypto entrepreneur Justin Sun.
Actress Lindsay Lohan, Youtube influencer Jake Paul and several other celebrities have been accused of illegally promoting cryptocurrency to a Chinese businessman accused of fraud.
The US Securities and Exchange Commission (SEC) said on Wednesday that it has accused Justin Sun of inflating the trading volume of Tronix (TRX) and BitTorrent (BTT) and with concealing payments made to celebrities for promoting tokens.
The SEC said Sun, which owns the Tron Foundation, BitTorrent Foundation and Rainberry, directed employees to make hundreds of thousands of simultaneous or near-simultaneous purchases and sales of TRX and BTT without an actual change of ownership in its court complaint. .
The SEC said Sun’s efforts to create the appearance of legitimate trading made it easier to sell TRX while maintaining price stability, generating tens of millions of dollars in illicit profits at the expense of investors.
“This case illustrates once again the high stakes investors face when securities for crypto-assets are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said in a statement.
Sun did not immediately respond to a request for comment via Twitter.
Lohan, Paul, rapper Akon, recording artists Ne-Yo and Lil Yachty, and adult actress Michelle Mason allegedly paid crypto investments to their millions of online followers without disclosing their payment.
All six agreed to pay more than $400,000 in cancellations, interest and penalties to settle the claims, the SEC said.
The agency said two of the celebrities named in the SEC complaint, rapper Soulja Boy and pop singer Austin Mahone, had not reached a settlement with the SEC.
The SEC issues civil penalties such as fines and does not file criminal charges.
US regulators have stepped up censorship of cryptocurrency in the wake of the stunning collapse of FTX and the arrest of its founder Sam Bankman-Fred on fraud charges last year.
The SEC is accusing Binance of mishandling funds and lying to regulators
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