The Securities and Exchange Commission (SEC) announced last Wednesday that YouTuber-turned-prizefighter Jake Paul, along with other celebrities, has agreed to pay a total of $400,000 to settle charges of touting a crypto asset without disclosing that they were being paid to do so.
A Tweet Too Far
The charges were brought against eight celebrities, including Paul, for promoting Tronix (TRX) tokens via tweets in exchange for crypto assets valued at $25,019. The SEC cited Section 17(b) of the Securities Act, which states that it is “unlawful for any person to: publish, give publicity to … [a security] for consideration received or to be received.” According to the SEC, the celebrities involved in the case, including Paul, did not admit to or deny the charges by settling the case. However, the commission stated that they violated anti-touting provisions of federal securities laws by promoting the securities without disclosing their compensation.
Settlers
The SEC’s Division of Enforcement and Office of Compliance Inspections and Examinations issued a statement nearly four years ago, reading that any celebrity or individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of anti-touting provisions of the federal securities laws.
In addition to Paul, actress Lindsay Lohan, adult film star Kendra Lust, and music artists Lil Yachty, Ne-Yo, and Akon have agreed to settle the charges. The SEC said that rapper Soulja Boy and singer Austin Mahone did not reach a settlement.
The SEC also announced charges against Tron Foundation Limited, which owns the Tronix (TRX) tokens, and three of its companies for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT). Sun and his companies were accused of orchestrating “a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation.” Paul, who has 3.8 million Twitter followers and more than 20 million YouTube subscribers, rose to fame thanks to his content on Vine, a video service that is now defunct. He suffered a split decision loss against Tommy Fury last month, the first defeat of his boxing career.