Lindsay Lohan and Soulja Boy Named Among 8 Celebs Facing Federal Charges

Lindsay Lohan, Soulja Boy, Jake Paul, and Ne-Yo are facing federal charges for illegally promoting cryptocurrency without disclosing they were being paid to do so. Singers Austin Mahone and Akon, adult film star Kendra Lust, and rapper Lil Yachty also face the same charges, the Securities and Exchange Commission announced Wednesday. The charges were filed as part of a broader case against crypto entrepreneur Justin Sun and his three companies, Tron Foundation, BitTorrent Foundation, and Rainberry.

Sun and his companies were charged with the “unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT),” the SEC said. Sun and the companies also allegedly fraudulently manipulated the secondary market for TRK through “wash trading,” in which they allegedly made it appear as though it was actively trading, but without “beneficial ownership.” They were also charged with plotting a scheme where celebrities were paid to promote TRX and BTT without them disclosing they were paid to do so.

Six of the celebrities agreed to pay a fine of $400,000 in “disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings,” the SEC said. Soulja Boy, whose real name isDeAndre Cortez Way, and Mahone are the two celebrities who have not agreed to the SEC’s terms yet.

Lohan’s representative told Variety she was not aware of disclosure obligations. “Lindsay was contacted in March 2022 and was unaware of the disclosure requirement. She agreed to pay a fine to resolve the matter,” her spokeswoman said.

The SEC alleges that Sun and his companies sold BTT and TRX as investments through unregistered “bounty programs,” which asked those interested to promote the tokens on social media and recruit others to join Tron-affiliated channels and start BitTorrent accounts in exchange for BTT and TRX distributions. The SEC also accused Sun of violating federal security laws with a scheme to “artificially inflate” the trading volume of TRX on the secondary market between April 2018 and February 2019. He allegedly told his employees to engage in “wash trades,” while he allegedly supplied TRX himself. “As alleged, Sun also sold TRX into the secondary market, generating proceeds of $31 million from illegal, unregistered offers and sales of the token,” the SEC said.

“This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure,” SEC Chair Gary Gensler explained in a statement. “As alleged, Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions 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 in TRX. 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.”

Sun and his companies “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 S. Grewal, Director of the SEC’s Division of Enforcement, added. “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.”