Lindsay Lohan, Lil Yachty Among Celebs Charged In Crypto Fraud Case

HOLLYWOOD, CA — Lindsay Lohan, Jake Paul and Lil Yachty are among the celebrities who have been charged with illegally shilling for cryptocurrency companies, the Securities and Exchange Commission announced Wednesday.

The charges were announced as part of a larger case by the federal government against crypto entrepreneur Justin Sun and three of his companies, according to an SEC news release.

The group of celebrities — which also includes musicians DeAndre Cortez Way (Soulja Boy), Austin Mahone, Shaffer Smith (Ne-Yo) and Aliaune Thiam (Akon), as well as porn star Michele Mason (Kendra Lust) — were charged with illegally touting the Tronix and BitTorrent cryptocurrencies. The commission claims the public figures failed to disclosed they were paid for their marketing efforts.

Six of the celebrities agreed to pay a total of over $400,000 in disgorgement, interest, and penalties to settle the charges, without admitting or denying the SEC’s findings. Cortez Way and Mahone are not included in that agreement, according to the release.

Tronix and BitTorrent are among the crypto tokens peddled by Sun through his companies Tron Foundation Limited, BitTorrent Foundation Limited, and Rainberry Inc.

The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, claims that Sun and his companies sold the crypto as investments through unregistered "bounty programs," which instructed people to peddle the tokens on social media, recruit people to join chat forums affiliated with Sun's companies and create accounts in exchange for toke distributions.

Sun and his companies are charged with offering unregistered crypto asset securities, fraudulently manipulating the secondary market for TRX through wash trading, and orchestrating the celebrity scheme.

“This case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure,” SEC Chairman Gary Gensler said in the release.

“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.”

The celebrity shill game is one of the focuses of work by New Republic journalist Jacob Silverman and actor Ben McKenzie ("The O.C."), who have been writing in recent years about what they label as the fraudulent business of cryptocurrency.

“If a celebrity is shilling the product — shilling being our favorite word in this industry — whether it’s shoes, or a sweater, a car, a vacation, or insurance, you understand the terms of what you’re getting,” Silverman said at a SXSW panel last year. “Also when you buy the item or service you’re probably not going to lose money as a result. You’re inviting people to take on risk that they don’t necessarily fully understand, through no fault of their own, because there’s no disclosure in this industry.”

Crypto marketing has previously led to legal trouble for Floyd Mayweather, DJ Khaled and Kim Kardashian.