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SEC Hits Celebrity Crypto Promoters With Charges

The Securities and Exchange Commission said Wednesday it had charged a number of celebrities for promoting cryptocurrencies without disclosing that they were paid to do so, reports the Washington Post. Internet provocateur-turned-professional boxer Jake Paul and actress Lindsay Lohan were among the eight celebrities charged by the SEC for illegally promoting cryptocurrencies Tronix (TRX) and BitTorrent (BTT). Former teen heartthrob Austin Mahone and the rapper Soulja Boy (whose legal name is DeAndre Cortez Way) are other celebrities named by the SEC. Entrepreneur Justin Sun and three of his companies face charges as well by the SEC for “the unregistered offer and sale” of TRX and BTT. The complaint, filed in the U.S. District Court for the Southern District of New York, also alleged that Sun “directed the manipulative wash trading of TRX to create the artificial appearance of legitimate investor interest and keep TRX’s price afloat,” referring to a scheme in which securities are essentially traded at the same time between associated entities, making the asset “appear actively traded without an actual change in beneficial ownership.”

The celebrities’ promotional messages about the cryptocurrencies were posted on social media, according to the SEC. Lohan, who has more than 8 million Twitter followers, tweeted on Feb. 11, 2021, that she was “already liking” three of Sun’s cryptocurrencies, including TRX. “Super fast and 0 fee,” she wrote. “Good job @justinsuntron.” Paul and Lohan, along with rapper Lil Yachty (whose legal name is Miles Parks McCollum), were among the six celebrities who agreed to collectively pay a total of more than $400,000 to settle the charges without admitting wrongdoing; the six were not named in the complaint, as Mahone and Soulja Boy were. The SEC on Wednesday also issued a legal notice to Coinbase, according to the cryptocurrency platform. Coinbase said it had received a “Wells notice,” a warning of forthcoming charges. The SEC “told us they have identified potential violations of securities law, but little more. We asked the SEC specifically to identify which assets on our platforms they believe may be securities, and they declined to do so,” Coinbase’s chief legal officer, Paul Grewal, wrote in a blog post. The charges, if brought, would be the most significant regulatory action yet against Coinbase, which has positioned itself as a sort of responsible adult in the room as other crypto platforms — namely FTX — have collapsed.


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