The US Security and Exchange Commission (SEC) charged eight celebrities, including actress Lindsay Lohan, with participating in an illegal crypto-scheme on Wednesday.
The regulator alleged that celebs used their social media platforms to encourage investing in crypto tokens. The promotion of weird digital currencies is not a crime itself - however, stars forgot to disclose the fact they were paid for this covert ad. The full list of celebrities includes rappers, adult movie stars, professional boxers who became influencers and other personalities that obviously possess a very shallow understanding of digital economy - to put it lightly.
The SEC investigation revealed that celebs were only the tip of the iceberg, as they did not fully understand what they were doing. Allegedly, the true mastermind behind the affair was Justin Sun, a crypto-investor and entrepreneur. He paid the celebs to promote TRX and BTT crypto assets in order to make it look like they were actively being traded. This is known as "wash trading."
15 December 2022, 13:37 GMT
SEC alleged that Sun organized "a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweet." Regulator Chief Gary Gensler added that "this case demonstrates again the high risk investors face when crypto asset securities are offered and sold without proper disclosure."
However, analysts stress the fact that the crypto industry is prone to pump-and-dump schemes in general. A 2022 research by a US business journal revealed that half of Bitcoin transactions are fake - due to the crypto's murky legal status and lack of proper regulative experience.