Why the SEC fined eleven celebrities for a tweet
Between 2018 and 2023 the SEC settled with eleven celebrities, from Floyd Mayweather to Kim Kardashian, over paid crypto promotion — not fraud. All were charged under Section 17(b) of the Securities Act of 1933: touting a security for pay without disclosing who paid and how much is itself a violation, whatever was said. Each order paired disgorgement with a separate, usually larger, civil penalty.
Nobody accused Floyd Mayweather of running a scheme. Nobody accused Kim Kardashian of lying. The Securities and Exchange Commission’s case against each of them, and against nine other celebrities between 2018 and 2023, rests on a single sentence none of them wrote: this is a paid ad, here is who paid and how much.
That sentence is required by Section 17(b) of the Securities Act of 1933 — not an SEC rule, not a crypto-specific statute, but a 90-year-old provision aimed at the stock promoters and newsletter writers this site already tracks under paid stock promotion. It does not ask whether the promotion was true. It asks one question: did the reader know it was paid for. Say yes on the record — payer and amount, plainly — and the statute is satisfied even if the token is worthless. Say nothing, and the statute is violated even if every word posted was sincerely believed.
A flow with no intermediary to blame
The version of paid promotion this site’s technique page describes usually runs through a chain built to obscure the payer: a shareholder pays an investor-relations firm, which pays a publisher, so that the article a reader sees carries no visible link back to the person who wanted the stock sold. The celebrity cases are structurally simpler, and in a way more direct.
There is no publisher and no bylined article standing between the payment and the reader. The
celebrity posts from their own verified account, to their own followers, in their own words. Kim
Kardashian’s post even carried the hashtag #AD — a general ad disclosure, satisfying influencer
marketing norms — and the SEC found her in violation anyway, because Section 17(b) asks for something
more specific than “this is sponsored”: it asks for the fact and the amount of payment from the
issuer, stated plainly. A post can disclose that it is paid for and still fail this statute, if it
does not say by whom and how much.
Two waves, eight years apart, the same charge
The first wave was the 2017–18 initial coin offering boom. The SEC settled with Floyd Mayweather Jr. — $300,000 disgorgement plus a $300,000 penalty, $600,000 in all, over three ICOs he had touted on Instagram, Twitter and Facebook — and DJ Khaled, named in the order as Khaled Khaled, for $50,000 disgorgement plus a $100,000 penalty, on the same day in November 2018: the SEC’s first announced use of Section 17(b) against social-media touting of a security-like digital asset. Steven Seagal followed in 2020, settling for $157,000 disgorgement plus a matching $157,000 penalty over promotion of another token offering.
The second, larger wave arrived with Kim Kardashian in October 2022 — $250,000 disgorgement, $10,415 in prejudgment interest and a $1,000,000 penalty, $1.26 million in total, over a single Instagram post — and Paul Pierce in February 2023, at $244,116 disgorgement, $15,449 in interest and a $1,150,000 penalty. The largest single action came a month later: the SEC’s March 2023 complaint against Justin Sun and his companies over the tokens Tronix and BitTorrent named eight celebrities as undisclosed paid promoters. Six settled the same day — Lindsay Lohan ($10,000 disgorgement, $30,000 penalty), Jake Paul ($25,019 disgorgement, $1,811 interest, $75,057 penalty), Lil Yachty, named in the order as Miles Parks McCollum ($10,000 disgorgement, $30,000 penalty), Ne-Yo, named in the order as Shaffer Chimere Smith ($12,000 disgorgement, $36,000 penalty), Akon, named in the order as Aliaune Damala Badara Thiam ($42,000 disgorgement, $2,814 interest, $126,000 penalty), and adult performer Kendra Lust, named in the order as Michele Anne Mason, whose release records a $2,865 penalty and no separate disgorgement figure our extraction could find. Two others named in the same complaint, Soulja Boy and Austin Mahone, did not settle that day and are litigated separately — this site’s case pages cover the settled orders, not the contested one, because the settled orders are what a completed record looks like.
Justin Sun’s own order is the one genuinely different document in this group: he is charged as the issuer who paid for the promotion and directed wash trading in the tokens being promoted, not merely as an undisclosed promoter. The celebrities around him were the customers of that arrangement in the only sense the statute cares about — paid, silent, and read by an audience with no way to tell the difference.
Reading the settlement amounts
Ten of these eleven orders pair two distinct figures: disgorgement, which returns the payment the celebrity actually received, and a civil penalty on top of it, which does not track any payment at all — only Mason’s order records a penalty with no disgorgement figure alongside it. Line up the other ten and the penalty is doing most of the work. Kardashian’s penalty is four times her disgorgement. Pierce’s is about 4.7 times his. Lohan, Lil Yachty and Ne-Yo were each penalized three times what they disgorged. Mayweather and Seagal are the two exceptions, each penalized exactly what they disgorged, dollar for dollar — no more, no less.
That pattern does not track fame or follower count in any direct way — Mayweather had by far the largest following of anyone in this group and drew only a 1:1 penalty, while Kardashian and Pierce, promoting a specific token years after the SEC had already announced this was a violation, drew close to 4:1 or 5:1. Read against the dates, the ratio looks like it tracks when the promotion happened more than who did it: the 2018 settlements, brought while Section 17(b)‘s reach into crypto touting was still a novel theory, penalized dollar-for-dollar; the 2022–23 settlements, brought after Mayweather and Khaled had already put every subsequent promoter on notice, did not.
None of this is a civil penalty in the fraud sense, and no order alleges the celebrity’s promotion caused a loss the penalty is sized to. Section 17(b)‘s own remedy for a first-time disclosure violation has always been to make disgorgement automatic; the size of the penalty layered on top of it is a judgment call the Commission is free to make case by case, and by 2022 it was making that call harder than it had in 2018.
What this section does not cover
Every case above is undisclosed touting. None of the eleven orders alleges that a celebrity manipulated a price, ran a pump, or misled anyone about what the token was — Kardashian’s own post carried a “not financial advice” disclaimer, and that did not matter to the charge either, because Section 17(b) does not ask whether the promotion was honest. Where a promotion is paired with an allegation that the promoter or the issuer also coordinated buying and selling to move the price, this site tags that conduct separately as pump and dump, and the two tags are not interchangeable: a celebrity can violate Section 17(b) by staying completely silent about being paid for something they otherwise had every right to say.