Lindsay Lohan, Jake Paul, and several other celebrities have been charged by the Securities and Exchange Commission (SEC) for their involvement in a cryptocurrency scheme. The charges were filed in connection with the investigation of Justin Sun and his companies, Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., which marketed crypto asset securities under the brand names Tronix (TRX) and BitTorrent (BTT).

The celebrities were charged with illegally promoting TRX and BTT without disclosing their compensation for doing so, according to Variety. The SEC alleges that Sun and his associates misled and harmed investors by offering securities without complying with registration and disclosure requirements and then manipulating the market for those securities.

Sun paid celebrities with millions of social media followers to promote the unregistered offerings, while specifically directing that they not disclose their compensation. The SEC says this is the type of conduct that the federal securities laws were designed to protect against.

Ms. Lohan, who has 8.4 million Twitter followers, was among the celebrities who promoted the cryptocurrency. The celebrities, except for Austin Mahone and Soulja Boy, have agreed to pay a penalty of more than $400,000 without admitting or denying the charges.

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Celebrity endorsements of cryptocurrencies have been a legal issue in recent months, with Kim Kardashian agreeing to a $1.2 million settlement last year in connection with her promotion of the EMA token.

Investors in the bankrupt crypto exchange FTX have also sued the firm's celebrity endorsers, including Tom Brady and Larry David, alleging that they effectively defrauded investors by convincing them to put their money into FTX and touting it as a safe space in the crypto ecosystem.

The SEC's charges against these celebrities demonstrate the importance of transparency and compliance with securities laws when promoting investments.