Former Disney star Lindsay Lohan and YouTuber-turned-boxer Jake Paul are two celebrities among several others that face federal charges for illegally touting crypto asset securities from a digital currency entrepreneur.

The Securities and Exchange Commission announced charges Wednesday against crypto asset entrepreneur Justin Sun and three of his companies — Tron Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc. (formerly BitTorrent) — for the unregistered offer and sale of crypto asset securities Tronix (TRX) and BitTorrent (BTT).

The commission accused Sun and his companies of “orchestrating a scheme to pay celebrities to tout TRX and BTT without disclosing their compensation,” which included Lohan, Paul, and DeAndre Cortez Way, otherwise known as American rapper Soulja Boy.

Authorities also named musicians Austin Mahone, Miles Parks McCollum (Lil Yachty), Shaffer Smith (Ne-Yo), Aliaune Thiam (Akon), and adult actress Michele Mason (Kendra Lust) in the complaint.

According to the complaint, unregistered offers and sales violate Section 5 of the Securities Act, which requires all issuers to register non-exempt securities with the Securities and Exchange Commission.

SEC Chair Gary Gensler said in a news release that such charges demonstrate the high risk investors face when crypto asset securities are offered and sold without proper disclosure.

“Sun and his companies not only targeted U.S. investors in their unregistered offers and sales, generating millions in illegal proceeds at the expense of investors, but they also coordinated wash trading on an unregistered trading platform to create the misleading appearance of active trading in TRX,” Gensler said. “Sun further induced investors to purchase TRX and BTT by orchestrating a promotional campaign in which he and his celebrity promoters hid the fact that the celebrities were paid for their tweets.”

According to the complainant, the celebrities fraudulently manipulated the crypto market for Sun’s companies by extensive wash trading, which allegedly involved purchasing and selling securities “to make it appear actively traded without an actual change in beneficial ownership.”

CLICK HERE TO GET THE DAILY WIRE APP

“While we’re neutral about the technologies at issue, we’re anything but neutral when it comes to investor protection,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said.

Grewal called Sun’s move an “age-old playbook” intended to mislead and harm investors, which offers securities without registration and disclosure compliance before manipulating the market for such securities.

“Sun paid celebrities with millions of social media followers to tout the unregistered offerings, while specifically directing that they not disclose their compensation,” he said. “This is the very conduct that the federal securities laws were designed to protect against regardless of the labels Sun and others used.”

Aside from Soulja Boy and singer Austin Mahone, the celebrities accused of touting Sun’s crypto scheme have agreed to pay more than $400,000 in interest and penalties to settle the charges. However, the accused has neither admitted nor denied the allegations.

Andrew Brettler, a lawyer for Lohan, told Reuters the actress was unaware of the disclosure requirements until last March.

“From the outset, she cooperated with the SEC’s investigation and ultimately agreed to disgorge the small amount of money she received and paid a fine to resolve this matter,” her attorney Andrew Brettler said in an emailed statement to the outlet.

Lawyers for Sun and the others named in the complaint either could not be identified, declined to comment, or did not respond immediately to requests for comment.

The Department of Justice (DOJ) revealed yet another government informant, according to an attorney for one of the Proud Boys facing a seditious conspiracy case tied to January 6.

This latest twist came on Wednesday when the government conveyed to the defense that this person, who was set to appear on behalf of one of the defendants on Thursday, served as a “Confidential Human Source” (CHS) from April 2021 through at least January 2023, according to a court filing.

“During this period of time, the CHS has been in contact via telephone, text messaging and other electronic means, with one or more of the counsel for the defense and at least one defendant,” attorney Carmen Hernandez wrote.

The informant, who was not identified in the court filing, also participated in prayer meetings with members of one or more of the defendants’ families and engaged in conversations with one of the defendant’s family members about replacing one of the defense counsel, the attorney added.

Hernandez, who is representing Zachary Rehl, made the assertions in a motion that seeks to compel the disclosure of all FBI interview reports as well as DOJ memos relating to the recording and reporting of the defense team.

U.S. District Court Judge Tim Kelly had told U.S. government to respond to the filing by 9 a.m. on Thursday, but then ordered the deadline to be extended to the afternoon followed by a hearing on the motion and pushed back the trial to resume on Friday.

In light of explosive defense motion filed this afternoon, Proud Boys trial tomorrow is postponed till Friday. Hearing will be held at 3pm on the motion. Govt ordered to respond to it by 1pm tomorrow. … 1/2 pic.twitter.com/R5FIY7gziJ

— Roger Parloff (@rparloff) March 22, 2023

The case involves Rehl, former Proud Boys leader Enrique Tarrio, and three other members — Joe Biggs, Ethan Nordean, Dominic Pezzola — who were indicted in federal court for seditious conspiracy and other offenses related to January 6, 2021, the day a crowd of people entered the U.S. Capitol and disrupted lawmakers who were meeting to certify Biden’s 2020 election victory.

Already, the Justice Department indicated the FBI had upwards of eight informants inside the Proud Boys leading up to January 6. The New York Times, which reported these revelations in November, insisted that no “evidence has surfaced” suggesting that the FBI “played any role in the attack.”

Others are more skeptical, including Julie Kelly, a senior writer for American Greatness who has been closely following this story. She reacted to the court filing on Wednesday by saying, “DOJ asked Judge Kelly to force defense team to vet questions related to FBI informants WITH THE GOVERNMENT before any were asked in front of the jury. Kelly, of course, complied. Now we know why.” The writer also opined that the DOJ “knows they have a terribly weak case.”

CLICK HERE TO GET THE DAILYWIRE+ APP

The Proud Boys trial has endured multiple delays and tense moments, including earlier this month when the federal judge blocked the questioning of witnesses on the bulk of unintentionally-disclosed FBI messages.

The filing on Wednesday from Hernandez said the defendants are “preparing a separate motion to dismiss the Indictment or for an evidentiary hearing, raising serious and substantiated allegations of governmental misconduct surrounding the surreptitious invasion and interference of the defense team by the government through a confidential human source, at the government’s behest.”

Roughly 26 months after the U.S. Capitol breach, the U.S. Attorney’s Office for the District of Columbia says more than 1,000 arrests have been made in connection to January 6 and notes more than 500 defendants have pleaded guilty, including four to a federal charge of seditious conspiracy.