Jake Paul Faces $100K Penalty from SEC for Undisclosed Crypto Endorsement Payment
Jake Paul, a boxer, social media sensation, and co-founder of Betr, has agreed to pay over $100,000 to the US Securities and Exchange Commission (SEC) on Wednesday. This payment came after he was charged with illegally promoting cryptocurrencies like Tronix and BitTorrent but failed to disclose that he was compensated for these promotions.
The SEC also charged actress Lindsay Lohan, rappers Soulja Boy, Lil Yachty, Ne-Yo, and Akon with similar offenses. These charges were part of a broader lawsuit against Justin Sun and three of his companies that accused them of selling unregistered crypto assets, manipulating the market for Tronix, and designing a scheme to pay celebrities without disclosing their compensation.
Gurbir S. Grewal, director of the SEC's Division of Enforcement, stated, "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 didn't comment on the issue.
Expensive Tweet for Jake Paul
Six celebrities, including Paul, agreed to settle without admitting or denying guilt, resulting in them paying over $400,000 in total. In Paul's settlement agreement, he admitted promoting TRX in a February 12, 2021, tweet on his account but didn't disclose that he received $25,019 worth of cryptocurrency to promote it to his over three million followers.
Apart from paying the SEC the value of cryptocurrency, Paul also agreed to pay over $1,800 in interest and a civil penalty of over $75,000.
In addition, Paul agreed not to accept any form of payment, whether directly or indirectly, from anyone involved with cryptocurrency for promoting the cryptocurrency for the next three years.
What is Betr?
Last year, Paul announced with entrepreneur Joey Levy that they were creating Betr, a sportsbook focusing on microbetting (in-game) markets, targeting more casual sports bettors. Betr received more than $50 million in funding for this venture.
Paul's role with Betr has primarily been towards its original content, with Betr aiming to acquire customers by its online sports betting services.
Betr, which is not the same as a sportsbook with the same name from Australia, launched in Ohio in January and has also received licenses in Massachusetts and Virginia. Earlier this month, Betr announced it would start offering pregame markets just like traditional sportsbooks.
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