The Securities and Exchange Commission (SEC) has filed civil charges against Tron founder Justin Sun and eight celebrities, including Lindsay Lohan, Jake Paul, and Soulja Boy.
The SEC claims Sun engaged in market manipulation and the unregistered offer and sale of securities by dealing with his crypto assets TRX and BTT. Meanwhile, the celebrities who touted the coin are being charged with not disclosing that they were being paid to do so and how much money they received.
The SEC’s complaint, filed on Wednesday, alleges that Sun held unregistered “bounty programs” that would ask users to promote BTT and TRX on social media, as well as encouraged users to recruit others to its Discord and Telegram channels.
Sun’s companies would then allegedly reward them with crypto for doing so. Additionally, the SEC claims Sun “directed the manipulative wash trading of TRX to create the artificial appearance of legitimate investor interest and keep TRX’s price afloat,” while his team “engaged in hundreds of thousands of TRX wash trades between accounts that Sun ultimately controlled.”
These were some of the paid tweets that were made without disclosure.
Lohan and Lil Yachty got $10,000, Ne-Yo got $12,000, and somehow Jake Paul got $25,000 for retweeting Lil Yachty. If I was Lil Yachty I'd be mad lol pic.twitter.com/MfcYvZyYRN
— web3 is going just great (@web3isgreat) March 22, 2023
The SEC has charged the celebrities with not disclosing that they were being paid to promote the cryptocurrency and for not disclosing how much money they received. The celebrities, except for Austin Mahone and Soulja Boy, have settled the charges for over $400,000 without admitting or denying the SEC’s findings.
The case highlights the risks that investors face when crypto asset securities are offered and sold without proper disclosure, according to SEC Chair Gary Gensler. He says that Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.
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