InfoBytes Blog
SEC charges celebrity with unlawfully promoting crypto security
On October 1, the SEC announced charges against a celebrity (respondent) who allegedly used her social media accountg to tout a crypto-asset security without disclosing the payment she received for the promotion. According to the SEC’s order, the respondent promoted the crypto-asset security on her social media account in exchange for financial payment from the issuer, receiving approximately $250,000 for the promotion. Specifically, the respondent posted a link to a securities offering conducted by an online company with a public website, in which it offered and sold digital tokens to the public. The tokens were offered and sold as investment contracts and therefore qualified as securities pursuant to Section 2(a)(1) of the Securities Act. The SEC’s order found that the respondent violated the anti-touting provision of the federal securities laws. Without admitting or denying the SEC’s findings, the respondent agreed to pay $1.26 million, including approximately $260,000 in disgorgement, which represents her promotional payment, plus prejudgment interest, and a $1,000,000 penalty. The respondent also agreed to not promote any crypto-asset securities for three years.