Eight celebrities, including Jake Paul, Lindsay Lohan, and Soulja Boy, were hit with charges by the Securities and Exchange Commission for illegally marketing digital assets affiliated with the flashy crypto entrepreneur Justin Sun, authorities announced on Wednesday.
Sun and his companies were also charged with offering and selling unregistered securities, and for manipulating the market by engaging in “wash trading,” the act of selling and repurchasing an asset “to make it appear actively traded without an actual change in beneficial ownership,” the commission said. Furthermore, Sun and the companies were charged with “orchestrating a scheme to pay celebrities to tout” the tokens without telling prospective investors they were receiving compensation.
“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities,” Gurbir Grewal, director of the SEC’s Division of Enforcement, said in a press release. He added that the celebrities were “specifically” instructed not to reveal the payments, “the very conduct that the federal securities laws were designed to protect against.”
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The full list of celebs hit with charges was Jake Paul, Lindsay Lohan, rappers Soulja Boy and Lil Yachty, porn actress Kendra Lust, and singers Ne-Yo, Austin Mahone, and Akon. They collectively paid more than $400,000 to settle the charges without admitting or denying wrongdoing, the SEC said. Soulja Boy and Austin Mahone did not participate in the settlement.
A spokesperson for Jake Paul declined to comment, while a spokesperson for Lohan said she “was contacted in March 2022 and was unaware of the disclosure requirement. She agreed to pay a fine to resolve the matter.”
Sun, 32, was born in China and earned degrees from Peking University and the University of Pennsylvania. He was an early crypto adopter and went on to found multiple companies in the space. Along the way, the young tycoon developed a reputation for spending his fortune in ostentatious ways, bidding $4.6 million to share a meal with Warren Buffett and $28 million for a ride to space with Jeff Bezos’ rocket company Blue Origin (the trip has not yet taken place). Bizarrely, in December 2021, Sun became ambassador to the World Trade Organization for the Caribbean country of Grenada.
The SEC charges suggest that some of Sun’s fortune was not earned cleanly. In Wednesday’s press release, the commission said that he allegedly “directed his employees to engage in more than 600,000 wash trades” between at least April 2018 and February 2019, and that he generated $31 million “from illegal, unregistered offers and sales of the token.”
