On March 22, 2023, the Securities and Exchange Commission (“SEC”) instituted cease and desist proceedings against actress, singer, and internet personality, Lindsay Lohan, for promoting “Tronix” tokens (“TRX”), a security being publicly offered by Tron Foundation Limited (“Tron”) without making disclosures required under the Securities Act.
Specifically, the SEC said that Lohan’s promotion of the TRX token “violated Section 17(b) of the Securities Act by touting the TRX token offering on her Twitter account without disclosing that she received compensation from the issuer for doing so, and the amount of the consideration.”
Regarding the consideration paid to Lohan, the SEC said: “Tron, through an intermediary, paid Lohan $10,000 for this promotion and provided Lohan with the specific language to include in the Tweet. Lohan did not disclose that she had been paid by Tron, or the amount of compensation she received from Tron and Sun for promoting the TRX offering on Twitter.”
Lohan promoted the TRX offering on social media by posting this to her Twitter account on February 11, 2021 (Source: Securities and Exchange Commission)
In response to this, the SEC said that Lohan made the following undertakings to the SEC:
a. for a period of three (3) years from the date of this Order, forgo receiving or agreeing to receive any form of compensation or consideration, directly or indirectly, from any issuer, underwriter, or dealer, for directly or indirectly publishing, giving publicity to, or circulating any notice, circular, advertisement, newspaper, article, letter, investment service, or communication which, though not purporting to offer a crypto asset security for sale, describes such crypto asset security; and
b. continue to cooperate with the SEC’s investigation in this matter.
Following these undertakings, the SEC made the following orders:
Pursuant to Section 8A of the Securities Act, Lohan shall cease and desist from committing or causing any violations and any future violations of Section 17(b) of the Securities ActLohan must comply with the above undertakingsLohan must pay disgorgement of $10,000, prejudgment interest of $670, and a civil money penalty in the amount of $30,000 to the Securities and Exchange Commission
Justin Sun, who reportedly owned and controlled Tron, the entity that publicly offered the TRX token, has now been charged by the SEC for “orchestration of the unregistered offer and sale, manipulative trading, and unlawful touting of crypto asset securities.”