US authorities have charged eight celebrities, including Lindsay Lohan and Jake Paul, with participation in an unlawful crypto scam.
The celebrities allegedly utilized their social media platforms to promote two cryptocurrencies without disclosing they were compensated to do so.
The US Securities and Exchange Commission (SEC) announced the allegations in a news release on Wednesday.
Without admitting guilt, Lindsay Lohan and Paul have paid to resolve the claims against them.
The other celebrities indicted are:
“The SEC accuses the group of unlawfully advertising TRX and BTT crypto assets “without disclosing that they were compensated for doing so and the amount of pay.”
Justin Sun, a crypto investor and ambassador for the Caribbean island nation of Grenada, is also accused of fraud for altering the trading activity of two tokens to make it appear as though they were being actively traded, a practice known as “wash trading.”
Mr. Sun, a Chinese-born protégé of Alibaba founder Jack Ma, is reputed to have once paid $4.6 million (£3.7 million) to dine with billionaire Warren Buffett.
The SEC said in their news release that he is accused of “orchestrating a promotional campaign in which he and his celebrity promoters concealed the fact that the celebrities were paid for their tweets.”
His firms, Tron Foundation Limited, BitTorrent Foundation Limited, and Rainberry Corp (previously BitTorrent), are all subject to the scheme’s charges.
Gary Gensler, chairman of the Securities and Exchange Commission, stated that this action highlights the considerable risk investors face when crypto asset securities are issued and sold without sufficient disclosure.
“Not only did Sun and his companies target US investors with their unregistered offers and sales, generating millions of dollars 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.”
Except for Soulja Boy and Mahone, all of the celebrities have paid in excess of $400,000 to settle the claims.
Lohan, best known for her part in the 2004 film Mean Girls, had 8.4 million followers on Twitter when she sent a message encouraging her followers to invest.
The 36-year-old actress, who, according to charge records, resides in Dubai, United Arab Emirates, paid $10,000 to the SEC and an additional $30,000 in penalties.
Paul, a Puerto Rican YouTuber, fighter, and resident, was forced to pay more than $100,000.
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