In recent news, a group of celebrities, including Lindsay Lohan and Ne-Yo, were forced to pay tens of thousands of dollars in settlements following claims that they promoted crypto investments on social media without declaring that they were paid ads. The SEC stated that Justin Sun and his companies Tronix and BitTorrent targeted US investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, and further coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX.
Who Were the Celebrities Involved in the Settlements?
The group of famous faces involved in this case included:
Lindsay Lohan
Ne-Yo
Jake Paul
Lil Yachty
Michelle Mason
The SEC reported that all of the celebrities agreed to pay more than £325,000 to settle claims of promoting crypto firms owned by entrepreneur Justin Sun on social media to their millions of followers. However, none of the stars have admitted or denied the SEC's findings.
Did All the Celebrities Pay the SEC's Fines?
According to Sky News, two other celebrities, pop singer Austin Mahone and rapper Soulja Boy, did not pay an amount in settlement to the SEC.
Following the announcement of her pregnancy last week, Lindsay Lohan's spokesperson revealed that the actress was first contacted in March 2022, and at the time of the posting, was unaware that she needed to alert followers to the fact that she was being paid. The Hollywood actress subsequently returned the £8,141 she was paid to promote the companies plus interest and also paid out a further £24, 425 in fines.
What Did SEC Chair Gary Gensler Say About the Case?
In a statement, SEC Chair Gary Gensler said, "This case demonstrates again the high-risk investors face when crypto asset securities are offered and sold without proper disclosure. As alleged, [Justin] Sun and his companies [Tronix and BitTorrent] 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."
Have Other Celebrities Faced Similar Issues?
This is not the first time that major public figures were seen promoting cryptocurrencies to their online platform followers. Kim Kardashian, a reality TV star, found herself in trouble with regulators for not declaring that she was being paid to recommend Ethereum Max tokens. The Skims founder paid an £813,635 fine to settle federal charges that arose due to her failure to declare her post was earning her money. In 2020, actor Steven Seagal was banned from promoting investments on social media for three years and was forced to pay £244,102 in fines as part of a similar settlement case.
Conclusion
It is essential to be transparent about sponsored content on social media. Failure to do so can lead to consequences, as demonstrated by the fines paid by Lindsay Lohan and Ne-Yo, among others. As crypto investments become more popular, it is important to ensure that they are properly disclosed to avoid misleading investors.