Jake Paul charged by SEC over crypto promotion

Jake Paul, the YouTuber-turned-boxing prizefighter, was among eight celebrities charged by the Securities and Exchange Commission for touting a crypto asset without disclosing that he was being paid to do so, according to a filing on Wednesday.

The filing cited Paul's tweet on Feb. 12, 2021, in which he promoted Tronix (TRX) tokens. The tokens are securities publicly offered by Tron Foundation Limited, which the filing said is owned by Yuchen "Justin" Sun, who was tagged in the tweet. The tweet was a reply to one from rapper Lil Yachty, who was also charged, and included a TRX hashtag and rocket ship emoji.

According to the SEC, Paul's promotion was in exchange for crypto assets valued at $25,019. Paul had 3.8 million Twitter followers at the time, the filing said. The SEC also cited Section 17(b) of the Securities Act, which says in part that it's "unlawful for any person to: publish, give publicity to ... [a security] for consideration received or to be received."

The filing said that Paul's tweet came nearly four years after the SEC's Division of Enforcement and Office of Compliance Inspections and Examinations issued a statement reading "[a]ny celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of anti-touting provisions of the federal securities laws."

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

Paul, 26, suffered a split-decision loss against Tommy Fury last month, the first of his career. Paul rose to fame thanks to his content on Vine, a video service that's now defunct, and then YouTube, where he now has more than 20 million followers. In addition to his followings on YouTube and Twitter - now at 4.6 million - he has more than 22 million followers on Instagram.

In addition to Paul and Lil Yachty, actress Lindsay Lohan, adult film star Kendra Lust, as well as music artists Soulja Boy, Austin Mahone, Ne-Yo and Akon are the others facing SEC charges.