SEC Obtains Consent Judgment Against Celebrity Charged with Illegally Touting Crypto Asset Securities for Crypto Entrepreneur Justin Sun

The Securities and Exchange Commission (SEC) has successfully secured a conclusive judgment in relation to the case against defendant Austin Mahone. The SEC had previously charged Mahone with unlawfully promoting crypto asset securities Tronix (TRX) and BitTorrent (BTT) without revealing his compensation for these actions.

The SEC’s initial complaint, filed on March 22, 2023, in the Southern District of New York, alleged that crypto entrepreneur Justin Sun and his three fully-owned entities – Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent) – participated in the unregistered sale of TRX and BTT crypto asset securities. Additionally, the complaint accused them of engaging in manipulative practices in the secondary market for these securities through extensive wash trading. The SEC’s allegations further implicated Sun and his entities in a scheme to pay influential celebrities, including Austin Mahone and co-defendant DeAndre Cortez Way (also known as Soulja Boy), to promote TRX and BTT on social media, while keeping their compensation undisclosed.

In this recent development, Austin Mahone has agreed to a final judgment. The judgment, obtained with his consent, imposes a permanent injunction restraining him from violating Section 17(b) of the Securities Act of 1933, which deals with the anti-touting provisions. Additionally, he will be subject to a three-year conduct-based injunction that prohibits any compensated promotion of crypto asset securities. The judgment also mandates Mahone to disgorge $7,507 in earnings, along with $682 in prejudgment interest, and a civil penalty of $37,535.

This resolution marks a significant step in the SEC’s efforts to maintain transparency and accountability within the crypto asset market, ensuring that promotional activities are conducted ethically and with proper disclosure.