Jake Paul ordered to pay $100,000 to SEC for crypto gambling
Sports betting entrepreneur Jake Paul has been hit with a $100,000 order since SEC to improperly promote a cryptocurrency.
According to the government, on February 12, 2021, Paul, a well-known internet personality and professional boxer, advertised on social media a crypto asset security that was being offered and sold. Paul did not disclose that he was paid to advertise the cryptocurrency.
Paul’s failure to disclose this fee violated a section of the Securities Act, which makes it illegal for any person to promote a security without fully disclosing receipt and amount of such fee from an issuer.
Paul promoted asset safety on Twitter in exchange for a crypto payment worth approximately $25,019. Paul, at the time of his promotion, had approximately 3.8 million Twitter followers.
Paul put his name behind the cryptocurrency of Tron Foundation Limited, and Tron’s owner and controlling person Yuchen (Justin) Sun, called “Tronix” (“TRX”) token. TRX extension tokens are offered and sold as investment contracts and thus constitute securities.
From August 2017 to the present, Tron and Sun have engaged in the continued public offering and sale of TRX extension tokens. Based on the offering materials and public statements from Tron and Sun, the buyers of TRX extension the tokens would have a reasonable expectation of profits from their investment in the tokens. Tron and Sun explicitly promoted TRX extension as an investment and advertised the potential for significant returns to investors through buying, holding and trading TRX extension tokens.
Tron and Sun worked on the listing TRX extension on numerous cryptocurrency trading platforms, including in the United States, and has publicly encouraged investors to buy TRX extension through the new offices. Tron and Sun regularly advertised the market capitalization, price and trading volume of TRX extension and published articles advising followers of allegedly opportunistic times to “invest.”
Paul must pay the Securities and Exchange Commission a settlement of $25,019, default interest of $1,811, and a civil fine in the amount of $75,057.