Jake Paul was among a group of eight celebrities charged by the Securities and Exchange Commission (SEC) for “illegally touting” a cryptocurrency scheme where the head of the organization is also under indictment.
According to a press release from the SEC, Paul and other celebrities including actress Lindsay Lohan, hip-hop stars Soulja Boy, Lil Yachty, Ne-Yo, Akon and adult film star Kendra Lust, were charged for promoting “TRX (Tronix) and/or BTT (BitTorrent Foundation) without disclosing that they were compensated for doing so and the amount of their compensation.”
Justin Sun, the crypto asset entrepreneur at the center of the investigation, ran the companies and he was also charged for the unregistered offer and sale of his crypto assets in TRX and BTT as well as fraudulently manipulating the market for his crypto brands.
The complaint, which was filed in the U.S. District Court for the Southern District of New York, alleged that Paul — who just recently lost his first boxing match to Tommy Fury — and the other celebrities promoted Sun’s crypto brands without disclosing that it was ultimately a paid advertisement.
These were some of the paid tweets that were made without disclosure.— web3 is going just great (@web3isgreat) March 22, 2023
Lohan and Lil Yachty got $10,000, Ne-Yo got $12,000, and somehow Jake Paul got $25,000 for retweeting Lil Yachty. If I was Lil Yachty I'd be mad lol pic.twitter.com/MfcYvZyYRN
“Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said in a press release.
“This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
As a result, Paul and the other celebrities — minus Soulja Boy and Austin Mahone — agreed to pay a total of more than $400,000 in disgorgement, interest and penalties to settle the charges against them without admitting or denying the SEC’s findings.
It appears cryptocurrency has come back to bite both Paul brothers after Jake’s older brother Logan Paul was also among five people named in a class action lawsuit filed over an alleged crypto scam involving a game where users reportedly lost thousands of dollars.