Social media influencer and Betr sportsbook co-founder Jake Paul recently got some unwanted attention from the Securities and Exchange Commission (SEC) and moved quickly to make sure the regulator wasn’t on his back for too long. Paul was one of several celebrities who settled with the SEC for their roles in promoting various cryptocurrencies, without disclosing the fact that they were paid for their endorsements.
Paul’s SEC headaches started last week when the SEC named Paul as one several celebrities who were touting a cryptocurrency called called Tronix tokens, which is produced by entrepreneur Justin Sun’s Tron Foundation Limited. The problem, the Commission’s eyes, was that Paul and the other celebrities were touting Tronix tokens on their social media without disclosing that they were paid for their endorsements. Paul received about $25,000 worth of the digital currency for his role in the promotion.
While Sun is facing charges in the scheme his posse of celebrtity shills, including Lindsay Lohan, are splitting around $400,000 in fines for their undisclosed endorsements. It’s unclear how much of that fine was personally paid by Paul.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement described the situation and its seriousness in comments reported on SBC Americas saying, “As alleged in the complaint, Sun and others used an age-old playbook to mislead and harm investors by first offering securities without complying with registration and disclosure requirements and then manipulating the market for those very securities. At the same time, Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation. This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”
It’s not clear whether Paul’s brush with the SEC will have any impact on Betr’s efforts to expand their micro-betting brand into new, regulated US gaming markets.