SEC charges eight celebrities in cryptocurrency scam

The Securities and Exchange Commission has charged several celebrities and an investor with being involved in a cryptocurrency scam.

In a press release Wednesday, the agency mentioned several high-profile celebrities including actress Lindsay Lohan, YouTube boxer Jake Paul, rapper Soulja Boy (real name DeAndre Cortez Way), and singer Akon (real name Aliaune Thiam).

The celebrities are charged with illegally promoting crypto assets Tronix (TRX) and BitTorrent (BTT) without informing their followers that they were compensated, let alone the amount they were compensated.

When Ms. Lohan tweeted about the tokens, she had over 8 million followers.

The SEC simultaneously charged crypto investor Justin Sun with being actively involved in illegally manipulating the value of the two tokens by a process known as “washing.” In a wash scam, holders of specific cryptocurrencies, like TRX or BTT, inflate the price of a token by selling it to themselves, therefore making it appear actively traded.

Mr. Sun is accused of creating a malicious promotional campaign with celebrities in an effort to artificially inflate the value of the tokens.

“Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading,” SEC Chairman Gary Gensler said.

All the celebrities, with the exception of Soulja Boy, have settled out of court without admitting guilt. Combined, they have paid more than $400,000 to settle the charges.

Wash trading, and fraud in general, is rampant in the crypto market. An FTC report from 2022 found that in 2021 over $680 million was reported stolen in crypto scams, with a median individual loss of around $2,000.

The other celebrities charged were singers Austin Mahone and Ne-Yo (real name Shaffer Smith), porn actress Kendra Lust (real name Michele Mason), and rapper Lil Yachty (real name Miles Parks McCollum).