Lindsay Lohan and Other Celebrities Charged by SEC for Crypto Endorsements Without Disclosure
Lindsay Lohan, along with several other celebrities including Jake Paul, Soulja Boy, Lil Yachty, Kendra Lust, Ne-Yo, Akon, and Austin Mahone, has been charged by the U.S. Securities and Exchange Commission (SEC) for promoting cryptocurrency without disclosing that they were paid for these endorsements.
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The charges are related to their endorsements of cryptocurrency companies founded by Justin Sun, the founder of TRON. The celebrities allegedly promoted these crypto companies without complying with registration and disclosure requirements, and they were accused of manipulating the market for these securities.
The SEC’s Director of the Division of Enforcement, Gurbir S. Grewal, stated, “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. At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
In response to the charges, the celebrities, excluding Soulja Boy and Austin Mahone, have agreed to pay $400,000 and effectively plead no contest to avoid admitting wrongdoing.
These charges highlight the legal implications of celebrities endorsing cryptocurrency projects without transparently disclosing their financial interests. It serves as a reminder that endorsements in the cryptocurrency space should comply with securities laws to protect investors and maintain transparency.