Jake Paul Out $100K to the SEC for Not Disclosing Crypto Endorsement Payment
Posted on: March 22, 2023, 05:37h.
Last updated on: March 22, 2023, 06:33h.
Jake Paul, the fighter, social media star, and co-founder of Betr, agreed to pay more than $100,000 on Wednesday to the US Securities and Exchange Commission, which charged him illegally promoting cryptocurrencies.
According to the release, Paul was one of eight celebs who publicly pitched either Tronix or BitTorrent but failed to reveal they were compensated for their endorsement. Other individuals charged included actress Lindsay Lohan and rap stars Soulja Boy, Lil Yachty, Ne-Yo, and Akon.
The charges were part of a larger filing the SEC made in a New York federal court against Justin Sun and three of his companies, all of which were accused of selling unregistered crypto assets, fraudulently manipulating markets for Tronix, and devising the scheme to pay celebrities but failing to disclose they were compensated.
As alleged in the complaint, 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 S. Grewal, director of the SEC’s Division of Enforcement said in a statement. “At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
A spokesperson for Paul declined to comment on the matter.
Costly Tweet for Jake Paul
The SEC said Paul was one of six celebrities who agreed to settle without admitting or denying guilt: Paul and the others who settled paid more than $400,000 combined in their agreements.
According to Paul’s SEC settlement filing, he promoted TRX in a February 12, 2021, tweet from his account without disclosing he received $25,019 in cryptocurrency to promote it to his nearly 4 million followers at the time.
In addition to paying the SEC the value of cryptocurrency, Paul also agreed to pay more than $1,800 in interest and a civil penalty of more than $75,000.
In addition, Paul agreed to not accept any compensation, directly or indirectly, from anyone connected to a cryptocurrency in exchange for promoting the cryptocurrency for three years.
Last August, Paul announced with entrepreneur Joey Levy they were creating Betr, a sportsbook that would focus on microbetting – or in-game – markets and seek to target more casual sports bettors. The duo received more than $50 million in funding for the venture.
Paul’s main focus with Betr has been tied to its original content: how the online sports betting operator has sought to acquire customers.
Betr, not to be confused with an Australian sportsbook with the same name, went live in Ohio in January. It has also received licenses in Massachusetts and Virginia.
Earlier this month, Betr said it would begin offering pregame markets that traditional sportsbooks offer on their sites.
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