Almost five years ago, we reported on the SEC’s first-ever case against celebrities for touting ICOs.  In 2022, Kim Kardashian paid $1.26 million in connection with her touting on social media a crypto asset security (she received about $250,000 for a post on Instagram).  On August 4, 2023, in the SEC’s most recent touting case, singer Austin Mahone consented to a judgment under which he paid about $46,000 for illegal touting.

The simple concept behind touting is that, if a celebrity is paid to promote a security, he must disclose not only that he is being paid but also the amount.  In this way, the public is able to distinguish a person’s unbiased promotion from a paid endorsement.  Section 17(b) of the Securities Act of 1933, often called the anti-touting provision, makes it unlawful to:

[P]ublish, give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof.

In March 2023, the SEC sued Mahone and other celebrities (such as Lindsay Lohan, Jake Paul and Soulja Boy) for unlawfully promoting on social media tokens known as Tronix (TRX) and BitTorrent (BTT).  The companies behind the tokens paid the celebrities to promote the tokens but the payments were not disclosed.  Lohan settled for about $40,000 and Paul for about $100,000.

Mahone was paid about $7500 for the following tweet: “When $TRX hits 50 cents and $BTT hits 1 cent I’m getting a tattoo of [the company founder’s] face.”  The language for the tweet was provided by the founder.

The judgment permanently enjoined Mahone from violating the anti-touting provisions of Section 17(b), imposed a three-year conduct-based injunction precluding any compensated touting of crypto asset securities, and ordered him to pay $7,507 disgorgement, $682 prejudgment interest and a civil penalty of $37,535.  Mahone consented to the judgment without admitting or denying the claims.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.