Over the past few years, Cryptocurrency has really come to the forefront of the financial conversation. Many people have made millions investing in cryptocurrency, and it seemed to be something that was a safe bet. However, recently, cryptocurrency has tanked, multiple businesses have gone under and people have lost everything they have after investing all of their money in cryptocurrency. Sadly, while there are some legitimate cryptocurrency companies, it appears that many companies used illegal techniques to steal the money people invested.
One of those crypto scammers appears to be crypto entrepreneur Justin Sun, who has several companies dealing in cryptocurrency. According to the SEC, Sun engaged in what is known as “wash trading”. Wash trading is buying and selling the same financial instruments to make his business look more successful than it was. Sun also paid numerous celebrities to endorse his companies, without disclosing that the celebrities were paid for their endorsements. The celebrities also never informed their followers that they were being paid for their endorsements. They may not even have done business with Sun.
That’s a BIG no-no, and the Securities and Exchange Commission (SEC) is going after those celebs. On March 22, it was revealed that the SEC had charged eight celebrities in the crypto scheme. So far, the SEC has charged adult film star Kendra Lust, controversial social media influencer Jake Paul, and rappers Ne-Yo, Soulja Boy, Akon, Lil Yachty, and Austin Mahone. They have also charged Disney star, Lindsay Lohan.
According to a report from the SEC, which The Hollywood Reporter shared:
“As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities,” said Gurbir S. Grewal, director of the SEC’s Division of Enforcement. “At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
The SEC has also confirmed that — aside from Mahone and Soulja Boy (born DeAndre Cortez Way) — all the other celebrities charged, including Lohan, have agreed to pay penalties amounting to $400000. As part of the agreement, they do not have to admit that they are guilty.
News of the fraud comes not long after Lohan revealed that she was expecting her first child. On March 14, Lohan took to Instagram to announce that she and her husband — financial adviser Bader Shammas — were expecting their first child. Lohan has not addressed her involvement in Sun’s crypto scheme.