Whoa! As the houses of cards making up most (or all?) of the crypto currency market crumble before our eyes, they’re taking plenty of celebs with them!
Critics have been saying for years now that stars who use their platform to shill for crypto should be ashamed of themselves. In some cases they’ve already faced very real financial consequences — like Tom Brady and Gisele who reportedly lost millions as marketplace FTX was exposed. But what about legal consequences?
Looks like a handful of celebs are actually being charged! The Securities and Exchange Commission disclosed on Wednesday that they filed charges against Lindsay Lohan! And the Parent Trap star wasn’t alone! YouTube megastar Jake Paul, Lil Yachty, Soulja Boy, Ne-Yo, Austin Mahone, Akon, and porn star Kendra Lust have been charged with “illegally touting TRX and/or BTT without disclosing that they were compensated for doing so and the amount of their compensation.”
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TRX is Tronix, BTT is BitTorrent. Both are crypto brand names tied to entrepreneur Justin Sun, whose businesses are the target of a larger investigation by the SEC. Sun allegedly instructed the celebs to plug the brands without saying they were paid to — to make it seem like a cool thing they were doing just because they really believed in it. That is apparently a crime when it comes to investment. SEC chair Gary Gensler explained:
“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure. As alleged, Sun and his companies not only targeted US 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.”
As we understand it, “wash trading” is when you own two companies and have one buy lots of stock in the other and vice versa, selling it back and forth to make it look digitally like there’s tons of active trading of the stock going on. It looks really hot, in other words. But really you’re just selling to yourself, juggling the stocks around without them ever really changing ownership. It’s a big trick, in other words. As for the celeb component, Gensler continued:
“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.”
Lindsay did NOT know she was committing a crime, according to her rep, something pretty understandable all things considered. The lack of knowledge most folks have about finance is why scams work. Her spokeswoman said in a statement:
“Lindsay was contacted in March 2022 and was unaware of the disclosure requirement. She agreed to pay a fine to resolve the matter.”
Yes, none of these stars are going to jail or anything. As in many cases of white collar financial crimes, the punishment isn’t prison but rather financial reimbursement — paying big ol’ fines. According to the SEC, 6 of the 8 celebs (all but Mahone and Soulja Boy) have already settled, agreeing to pay “more than $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings.”
Hopefully this will make other celebs think twice before plugging something lots of people are warning online is a shady investment.
[Image via The Tonight Show/Harper’s Bazaar/YouTube/Jake Paul/Instagram.]
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