The U.S. Securities and Exchange Commission (SEC) has brought another string of cases against well-known celebrities for touting crypto assets on social media without disclosing the payments they received for these endorsements.
Back in December 2022, the SEC made headlines for fining Kim Kardashian $1.26 million based on her Instagram posts that proclaimed the supposed benefits of EthereumMax and its EMAX tokens. (see our post here) These advertisements failed to disclose that she was compensated, and the SEC alleged that these promotions violated the anti-touting provisions of US federal securities laws. That wasn’t the SEC’s first major crypto anti-touting case; in 2020 the SEC fined actor Steven Seagal $300,000 for failing to disclose payments he received for promoting an initial coin offering from Bitcoiin2Gen (B2G).
In March, the SEC announced similar charges against 8 social media influencers, all of whom had allegedly been compensated to endorse Tronix (TRX) and BitTorrent (BTT) via Twitter and Discord. Six of these celebrities have settled, agreeing to pay tens of thousands of dollars each, totalling more than $400,000 in combined disgorgement. The SEC has also brought charges of fraud and market manipulation against Justin Sun, the founder of the Tron Foundation and BitTorrent, who issues these crypto assets.
The following individuals have settled with the SEC based on these charges:
- Lindsay Lohan (Actress)
- Jake Paul (Social media personality)
- Miles Parks McCollum (Rapper, who goes by “Lil Yachty”)
- Shaffer Smith (Singer, who goes by “Ne-Yo”)
- Michele Mason (Adult film star, who goes by “Kendra Lust”)
- Aliaune Thiam (Singer, who goes by “Akon”)
Charges are still pending for these individuals:
- DeAndre Cortez Way (Rapper, who goes by “Soulja Boy”)*
- Austin Mahone (Singer)*
- Justin Sun (founder of Tron Foundation and BitTorrent)
It should be noted that whether any of these particular crypto assets constitute securities for the purposes of US securities law is not yet settled. Nevertheless, the SEC has made it clear that it takes the view that all crypto assets other than Bitcoin are likely securities. Therefore, anyone using social media to tout the benefits of a crypto asset should ensure they include proper disclosures when receiving any compensation for their endorsement.