Lindsay Lohan Accused by SEC of Illegally Touting Crypto Token

The U.S. Securities and Exchange Commission sued crypto mogul Justin Sun for allegedly violating securities rules, and said eight celebrities including Lindsay Lohan and the artist known as Soulja Boy illegally touted tokens.

Lohan and Soulja Boy, whose real name is DeAndre Cortez Way, illegally promoted the tokens — Tronix and/or BitTorrent — without disclosing compensation, the SEC alleged. Most of the celebrities agreed to pay a total of more than $400,000 to settle the allegations, without admitting or denying the SEC’s findings, the agency said in a statement. The only two that didn’t were Soulja Boy and singer-songwriter Austin Mahone.

Lohan didn’t immediately respond to requests for comment by phone or email. The attorneys representing Cortez Way and Mahone declined to comment.

The lawsuit, filed on Wednesday in federal court in New York, alleges that Sun worked with companies he owns and controls – the Tron Foundation, BitTorrent Foundation Ltd., and Rainberry Inc. — to engineer the offer and sale of the unregistered securities, including the Tronix and BitTorrent tokens. It also accuses the crypto entrepreneur of breaking antifraud and market manipulation rules.

Read More: How Logan Paul’s Crypto Empire Fell Apart

“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,” Gurbir Grewal, the director of the SEC’s enforcement division, said in a statement.

Sun was an early investor in Bitcoin, and has used his investments as well as his success with a social-media app in China to start Tron, a blockchain network that’s currently used by thousands of gambling and gaming apps.

In the complaint, the SEC said Sun and his companies employed “bounty programs” that directed users to complete certain tasks, such as social media promotions, in exchange for tokens.

The agency also alleged that the crypto businessman carried out a fraudulent scheme to artificially inflate the trading volume of Tronix — the native crypto of the Tron network — in the secondary market, including by directing his employees — from at least April 2018 through February 2019 — to conduct more than 600,000 “wash trades” of TRX between two crypto accounts he controlled.

Read More: Influencers Are Scamming Their Fans Through Crypto. Here’s How Their Tactics Have Evolved.

“It makes sense that the SEC examines the practice of wash trading,” said Campbell Harvey, a finance professor at Duke University. “Market manipulation should not be allowed in any type of market. Again, there should be clear guidelines specific to the crypto space as to what constitutes manipulation.”

Sun, and representatives of Rainberry didn’t immediately return requests for comment.

TRX, the token associated with the Tron network, dropped around 12%. The price of BTT, a token associated with BitTorrent, fell by more than 1%.

Read More: 2022 Killed Wide-Eyed Crypto Idealism. Here Are Lessons for 2023

The total value locked in decentralized-finance apps — which let people lend, borrow and trade — on the Tron blockchain dropped by more than 3% in the last 24 hours, to about $5 billion, in the last 24 hours, according to tracker DeFi Llama.

— With assistance from Olga Kharif.

Lindsay Lohan Accused by SEC of Illegally Touting Crypto Token

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