Lil Yachty, Soulja Boy, Ne-Yo, Akon, and More Charged by SEC for Illegal Cryptocurrency Promotions

Lil Yachty, Soulja Boy, Ne-Yo and Akon have been charged by the Securities and Exchange Commission for illegally promoting cryptocurrency. The artists were accused of accepting money to tout the crypto asset securities Tronix and BitTorrent without disclosing that they were paid to do so or the amount they received. Other celebrities charged include Jake Paul, Lindsay Lohan, Austin Mahone, and adult film actress Kendra Lust. With the exception of Soulja Boy and Mahone, each agreed to pay more than $400,000 in “disgorgement, interest, and penalties” to settle the charges without admitting or denying the SEC’s findings. Pitchfork has reached out to representatives for Lil Yachty, Soulja Boy, Ne-Yo and Akon for comment.

The SEC announced the news alongside charges against cryptocurrency entrepreneur Justin Sun and three of his companies—Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent Inc.)—for the unregistered offer and sale of Tronix and BitTorrent. Sun is charged with violating federal securities laws by orchestrating a scheme to artificially inflate Tronix’s trading volume. Sun then allegedly further induced investors to purchase Tronix and BitTorrent by paying celebrities with large social media followings to promote the company’s offerings while directing them to not disclose their compensation.

In a statement accompanying the announcement of the charges, the director of the SEC’s Division of Enforcement said:

While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection. 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. 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.

Sun purchased BitTorrent Inc., the parent company behind the BitTorrent peer-to-peer file-sharing protocol, in 2018. Upon the sale BitTorrent author and company founder Bram Cohen left the company to start his own “green” cryptocurrency Chia.

In 2020, the SEC charged T.I. with promoting fraudulent initial coin offerings in connection with a company called FLiK. In 2018, the commission charged DJ Khaled with failing to disclose payments received for promoting an initial coin offering from a company called Centra Tech.