The SEC Is Suing Jake Paul, Soulja Boy, Lindsay Lohan and Other Celebrities Over Tron Crypto Endorsement

The U.S. Securities and Exchange Commission (SEC) announced a lawsuit Wednesday against Tron founder Justin Sun on fraud charges. Additionally, the SEC brought forth civil charges against eight celebrities who helped Sun promote the coin, including YouTuber-turned-boxer Jake Paul, actress Lindsey Lohan and rapper Soulja Boy. 

Sun founded Tron, a DAO blockchain ecosystem, as well as its associated crypto coin Tronix TRX/USD, in 2014 which made him an early mover in the crypto space.

The SEC lawsuit alleged Sun illegally promoted unregulated securities by having celebrities endorse the cryptocurrencies without disclosing that the celebrities were paid to do so. 

The full list of celebrities named in the case includes Lindsay Lohan, Jake Paul, DeAndre Cortez Way (Soulja Boy), Austin Mahone, adult actress Michele Mason, (Kendra Lust) Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon).

All of the celebrities except for Mahone and Soulja Boy agreed to pay a $400,000 fee to settle the charges. The suit alleges that celebrities promoted the Tron as well as BitTorrent BTT/USD tokens, using social media platforms. 

Sun faces more serious allegations of trying to artificially inflate the asset prices of TRX and BTT tokens by using a method called “wash trading” in which one buys and sells assets back to themselves, artificially inflating volume. The case alleged Sun’s employees at Rainberry, a crypto exchange and platform, would conduct the trades using company money. 

Read Also: Coinbase CEO Brian Armstrong Advocates For Clearer Crypto Regulations In Washington D.C.

“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 in a statement. “Orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweet.”

The case against Sun and the associated celebrities is part of a bigger movement by the SEC to try and crack down on unregulated crypto exchanges and assets. Many prominent people in the crypto industry are in favor or more regulation to protect investors, including Coinbase CEO Brian Armstrong. 

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