Jake Paul Joins Paul Pierce And More Celebs Getting Fined For Cryptocurrency Malpractices By The SEC

The cloudy dreams of digital currency success touted by notable athletes and celebs as a financial game-changer are more apparent. The collapsing cryptocurrency saga has created problems for athletes like influencer-turned-boxer Jake Paul, and NBA veteran Paul Pierce with the Securities and Exchange Commission roils on.

Behind many of the claims from so-called trusted figures in sports and entertainment were undisclosed hushed sums to make the public believe they were honest financial suggestions by their favorite celebs. The proliferation of newly baptized financial advisers acting as evangelists of the digital currency wave were prevalent, with various social media channels serving as their pulpit.

The SEC Problem

“The Problem Child” caught an ‘L’ from the SEC on Wednesday, with other celebrities including Lindsay Lohan, Souljah Boy, Lil Yachty, Ne-Yo, and Akon getting bagged right with him. The SEC claimed they illegally touted the TRX and BTT coins without disclosing they were compensated for their “referral” and compensation amount. Without admitting or denying the SEC’s allegations, the celebrities agreed to pay more than $400,000 to settle the claims, with Paul paying $100,000 himself.

At the top of the list of those named by the SEC Wednesday is a man most don’t know, crypto asset entrepreneur Justin Sun. Three of his companies Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent) were charged for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT), per an SEC news release.

Through multiple unregistered “bounty programs,” Sun and his companies offered and sold TRX and BTT to the market as investments and directed the celebrities to promote the tokens on social media. Additionally, they would join and recruit others to Tron-affiliated Telegram and Discord social media channels and create BitTorrent accounts in exchange for TRX and BTT distributions. Bit Torrent is a communication protocol for peer-to-peer file sharing.

Sun and two of his companies, BitTorrent Foundation and Rainberry, offered and sold BTT tokens in unregistered monthly airdrops to investors in the United States who purchased and held TRX in Tron wallets or on participating crypto asset trading platforms. However, these unregistered offers and sales violated Section 5 of the Securities Act per the SEC.

Pierced By Tokens

Last month, NBA veteran Paul Pierce was fined by the SEC for promoting on social media EMAX tokens, a crypto asset securities offered and sold by EthereumMax, without disclosing the payment he received for touting the token. Pierce failed to admit being paid more than $244,000 in EMAX tokens for promotion on Twitter. The SEC also felt the Pierce tweet made misleading statements about EMAX when he tweeted a screenshot of an account with significant holdings and subsequent profits without admitting he was not holding as much as the amount in the screenshot.

Pierce agreed to settle the claims and pay $1.409 million in penalties and interest.

Paul was another domino in a set that the SEC is dropping on certain celebrity crypto endorsers.

“This case is yet another reminder to celebrities: The law requires you to disclose to the public from whom and how much you are getting paid to promote investment in securities, and you can’t lie to investors when you tout a security,” said SEC Chair Gary Gensler in a news release.

“When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements.”

In other words, beware when using your popularity to hawk financial instruments; it is not as simple as an endorsement.

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