The Securities and Exchange Commission has sued cryptocurrency entrepreneur Justin Sun, a Chinese national, accusing him and two celebrities of illegally trading, selling and marketing crypto securities. A handful of other celebrities, including actress Lindsey Lohan and influencer Jake Paul, have settled related charges with the SEC.
Sun, who owns and controls the Tron Foundation, the BitTorrent Foundation and Rainberry, allegedly schemed to offer and sell the TRX and BTT cryptocurrencies as securities while also creating secondary markets to trade TRX and BTT. However, neither cryptocurrency was registered as a security with the SEC.
The SEC also alleges that Sun’s companies traded TRX between one another to create artificial interest in the currency, then paid celebrities to star in publicity campaigns for the two currencies.
YouTube cover song singer Austin Mahone and rapper DeAndre Cortez Way — better known as Soulja Boy — were also named as defendants in the SEC’s lawsuit for not disclosing that they were paid to promote BTT and TRX. That lack of disclosure, the SEC alleged, was by design.
“In February 2021, Sun falsely stated on social media, ‘If any celebrities are paid to promot TRON, we require them to disclose.’ In fact, Sun himself arranged the payments to celebrities and knew those payments were not disclosed,” the SEC wrote in its complaint, filed in U.S. District Court in the Southern District of New York.
The SEC’s complaint also cites three tweets by celebrities boosting the cryptocurrencies without disclosing that the posts were advertisements. Sun is alleged to have paid for those celebrities to be paid between $955 and $12,000 for the ads.
Celebrities advertisers, as named by the SEC, also include actress Lindsey Lohan, YouTube personality and boxer Jake Paul, adult film actress Michele Mason, and musicians Miles Parks “Lil Yachty” McCollum, Shaffer “Ne-Yo” Smith, and Aliaune “Akon” Thiam. All were charged for illegally advertising for the cryptocurrencies without disclosing compensation.
All of the named celebrities, save for Mahone and Way, settled with the SEC for a total of more than $400,000 in penalties and interest without admitting or denying the SEC’s allegations.
Sun’s TRON Foundation has not yet responded to a request for comment from Spectrum News.
Lohan’s publicist Leslie Sloan said that Lohan was unaware of the disclosure requirement. She gave up her $10,000 payment, plus interest, and paid a $30,000 fine, the Associated Press reported.
