Jake Paul Reaches Settlement With SEC In Crypto Solicitation Case

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March 22, 2023

Anthony OlivieriESPN.com

Jake Paul, the YouTuber-turned-prizehunter, was among several celebrities who agreed to pay a total of $400,000 in restitution, interest and penalties to settle charges of touting a crypto asset without disclosing that they were paid for the asset. do, the Securities and Exchange Commission announced on Wednesday.

In settling, Paul did not admit or deny the charges, the SEC said.

An SEC filing on Wednesday indicted eight celebrities, including Paul. He quoted Paul’s tweet on February 12, 2021, in which he promoted Tronix (TRX) tokens. The tokens are securities offered to the public by Tron Foundation Limited, whose records indicate it is owned by Yuchen “Justin” Sun, who was tagged in the tweet. The tweet was a response to one from rapper Lil Yachty, who was also charged, and included a TRX hashtag and a rocket emoji.

According to the SEC, Paul’s promotion was in exchange for crypto assets worth $25,019. Paul had 3.8 million Twitter followers at the time, the filing reads. The SEC also cited Section 17(b) of the Securities Act, which states in part that it is “unlawful for any person to: publish, give publicity to… [a security] against remuneration received or to be received. »

The filing says Paul’s tweet came nearly four years after the SEC’s Law Enforcement Division and Office of Inspections and Compliance Reviews released a statement stating “[a]Any celebrity or other person who promotes a virtual token or coin that is a security must disclose the nature, extent and amount of compensation received in exchange for the promotion. Failure to disclose such information is a violation of the anti-soliciting provisions of the federal securities laws.”

A rep for Paul did not immediately respond to a request for comment.

The SEC also announced charges against Sun and three of its companies “for the unregistered offering and sale of securities of crypto assets Tronix (TRX) and BitTorrent (BTT).” The commission also said in part that Sun and his companies orchestrated “a scheme to pay celebrities to sell TRX and BTT without disclosing their compensation.”

Paul, 26, suffered a split decision loss to Tommy Fury last month, the first defeat of Paul’s boxing career. Paul became famous for his content on Vine, a now defunct video service, then YouTube, with which he now has more than 20 million followers. In addition to his YouTube and Twitter followers – now at 4.6 million – he has more than 22 million Instagram followers.

The SEC announced that six of the eight defendants – Paul, actress Lindsay Lohan, adult film star Kendra Lust and music artists Lil Yachty, Ne-Yo and Akon – have settled. None of them admitted or denied the charges. The commission also said rapper Soulja Boy and singer Austin Mahone had not reached an agreement.

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