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Lindsay Lohan and Jake Paul have been charged with securities fraud by the SEC in 2023

The celebrities allegedly used their social media platforms to promote two crypto tokens without disclosing that they were paid to do so. The charges were announced by the US Securities and Exchange Commission (SEC). Lohan and Paul have agreed to pay a settlement without admitting guilt.

The following celebrities have also been charged: Soulja Boy is a musician (DeAndre Cortez Way), Austin Mahone is a singer, Kendra Lust is a pornstar (Michele Mason), Lil Yachty is a rapper (Miles Parks McCollum), Ne-Yo is a musician (Shaffer Smith) and Aliaune Thiam (Akon) is a Senegalese-American singer. The group is accused of illegally promoting TRX and BTT cryptocurrency assets without disclosing that they were compensated for doing so and the amount of their compensation. Justin Sun, a crypto investor and diplomat for Grenada, is also accused of fraud for manipulating the trading activity of the two tokens to make it appear as if they were actively traded, a crime known as "wash trading."

Mr. Sun, a Chinese-born protégé of Alibaba founder Jack Ma, is well-known for paying US$4.6 million (£3.7 million) for a dinner with investor Warren Buffett. According to the SEC, 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 tweet. Tron Foundation Limited, BitTorrent Foundation Ltd, and Rainberry Inc (formerly BitTorrent) are also named as defendants in the scheme. This case highlights the high risk that investors face when crypto asset securities are offered and sold without proper disclosure. Not only did Sun and his companies target 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.

Except for Soulja Boy and Mahone, all of the celebrities have paid a total of more than US$400,000 to settle the charges. Lohan, best known for her role in the 2004 film Mean Girls, had 8.4 million Twitter followers when she posted a message encouraging them to invest. The 36-year-old actress, who according to charging documents is a resident of Dubai, United Arab Emirates, paid the SEC US$10,000 and another US$30,000 in penalties. Paul, a YouTuber, boxer, and Puerto Rican resident were ordered to pay more than US$100,000.