SEC Sues Jake Paul for Pushing Sun-Linked Cryptos Illegally

The U.S. Security and Exchange Commission (SEC) has sued social media influencer and boxer Jake Paul for illegally promoting cryptocurrencies. Jake Paul, brother to Logan Paul, has a keen following on social media and is among the celebrities in this lawsuit.

Paul was accused of promoting TRX and BTT without revealing he received payment for the job. The SEC found such actions misleading and named him among other celebrities in their lawsuit. However, Paul opted for a monetary settlement in response to these accusations.

Jake Paul Dragged Into Justin Sun’s Web

Jake Paul is part of the lawsuit alongside celebrities such as  Lindsay Lohan, Soulja Boy, Ne-Yo, Akon, and Lil Yachty. The SEC has accused the celebrities of illegally promoting unregistered TRX and BTT tokens to unsuspecting investors.

Jake Paul is being sued by the SEC for illegal promotion of cryptocurrencies pic.twitter.com/GkFGTs5WGC

— Dexerto (@Dexerto) March 22, 2023

With their large fanbase, these celebrities might have convinced many investors indirectly to purchase the tokens. However, Jake Paul and most other celebrities opted to pay a combined sum exceeding $400,000. This money will serve as fines, interest, restitution, and to settle the SEC charges.

Justin Sun Tron’s founder is the main defendant in the lawsuit. According to the SEC, Sun, and Tron Foundation employees, engaged in wash trades to artificially inflate TRX’s trading volume. Tron and BitTorrent foundations facilitated over 600,000 trades between April 2018 and February 2019.

Gary Gensler, the SEC chair, stated that Sun ran a deceptive campaign with celebrities to con investors into buying TRX tokens. He noted that these tokens sold on a secondary market. Sun and associates gained around $31 million from the illegal trade. 

He also frowned that the celebrities promoting the TRX and BTT tokens did not disclose their payment to the public. Additionally, Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated that the SEC maintained neutrality but will continue to protect investors.

The SEC’s announcement caused a sudden drop in  TRX, HT, SUN, and JST token prices. However, TRX seemed the most affected, losing more than 15% of its value within two hours. 

Jake Paul’s brother Logan Paul, faced a similar lawsuit last month. Logan, a YouTube sensation and professional WWE wrestler was mentioned in a class-action lawsuit over an NFT sales project CryptoZoo. 

According to the suit, the defendants used Logan Paul’s platform to promote their products to users leading to several purchases. Unfortunately, the game never worked or even existed, making the zoo tokens worthless and sparking outrage. The lawsuit claimed that Paul and his associates were obliged to inform the public that the game was non-functional. 

Such events are now commonplace in crypto as more projects emerge, leading to calls for strict regulations.

Cryptocurrencies And Regulation

The regulation of cryptocurrencies seems to be a divisive topic. Some crypto executives, such as Ripple’s CEO, Brad Garlinghouse, believe strict regulations will destroy crypto’s decentralized nature.

Intuit Trading on Twitter stated that the SEC suing Justin Sun is beyond an attack on TRX but all other cryptocurrencies. He believes that every crypto developer is in violation if they have previously engaged in marketing. 

What the SEC is suing Justin Sun for is what every crypto developer does to some extent. This is more than just an attack on #TRX it's an attack on all of #crypto. Every founder is now on notice that they're in violation of securities laws if they have done any marketing at all

— Intuit Φ (@Intuit_Trading) March 22, 2023

However, the trader noted that the SEC vs. Ripple Labs case could weaken the SEC’s resolve to harm crypto if Ripple is victorious. He noted that Coinbase is facing a legal threat from the SEC, claiming they are in full attack mode.

Ripple Labs Vs. The SEC is a popular dispute in crypto circles, dating back to 2020. The SEC accused Ripple of marketing unregistered securities, classifying XRP as securities. However, Ripple Labs maintained that just like Bitcoin and Ethereum, XRP is a token, not part of securities.

Ripple Labs has previously refused to consider any settlement pressing forward for a summary judgment slated for 2023. Most pro-crypto groups believe a victory over the SEC will water down their clampdown on crypto establishments.

 Also, there is the prevailing argument that the SEC regulatory framework currently has no clear definition. However, the SEC insists that their concern is protecting investors from fraudulent crypto projects at all costs.

Investment Opportunities Worth Considering

Fight out (FIGHT)

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Metropoly (METRO)

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The presale is almost complete, and the token will soon be listed on exchanges. Many investors have already shown confidence in the project, and Metropoly is expected to transform the real estate investment industry.