Influencer and social media personality, Jake Paul, has been fined over $400,000 by the US Security and Exchange Commission (SEC) for promoting cryptocurrency without disclosing that he was being paid to do so. The charges have been brought against Paul for violating US securities law and for promoting a virtual coin that is considered a security.
Paul is among a few celebrities who have been charged with illegally touting cryptocurrency on social media. As a part of the settlement, Paul has agreed to pay over $400,000 in disgorgement, interest, and penalties. The charges against Paul state that he promoted the cryptocurrency on various social media platforms without disclosing that he was being paid to do so.
Violation of Securities Law
The US SEC has stated that social media influencers are not exempt from federal securities laws and must adhere to the antifraud provisions. In addition, any celebrity or individual who promotes a virtual coin or token that is considered a security must disclose the nature, scope, and amount of compensation received for the promotion.
Paul had been paid to promote the cryptocurrency on his social media channels, including Twitter, Instagram, and YouTube, without disclosing the paid promotion. According to the SEC, Paul had failed to disclose that he was being paid for the promotions, which is a violation of securities law.