In re Jake Joseph Paul

UNITED STATES OF AMERICA 
Before the 
SECURITIES AND EXCHANGE COMMISSION 
 
SECURITIES ACT OF 1933 
Release No. 11171 / March 22, 2023 
 
ADMINISTRATIVE PROCEEDING 
File No. 3-21347 
 
In the Matter of 
 
Jake Joseph Paul 
 
Respondent. 
 
 
 
 
ORDER INSTITUTING CEASE-AND-
DESIST PROCEEDINGS PURSUANT TO 
SECTION 8A OF THE SECURITIES ACT 
OF 1933, MAKING FINDINGS, AND 
IMPOSING A CEASE-AND-DESIST 
ORDER  
  
I. 
 
 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-
and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 
of 1933 (“Securities Act”), against Jake Joseph Paul (“Paul” or “Respondent”). 
 
II. 
 
 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 
of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 
of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 
which the Commission is a party, and without admitting or denying the findings herein, except as 
to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are 
admitted, and except as provided herein in Section V, Respondent consents to the entry of this 
Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 
1933, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   
 
III. 
 
 On the basis of this Order and Respondent’s Offer, the Commission finds
1
 that: 
 
                                                 
1
 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on 
any other person or entity in this or any other proceeding. 
 
 

 2 
Summary 
 
 On February 12, 2021, Paul—a well-known internet personality and professional 
boxer—touted on social media a crypto asset security that was being offered and sold. Paul did not 
disclose that he was being paid to give publicity to such security by the entity offering and selling 
it to the public. Paul’s failure to disclose this compensation violated Section 17(b) of the Securities 
Act, which makes it unlawful for any person to promote a security without fully disclosing the 
receipt and amount of such compensation from an issuer. 
 
Respondent  
 
 Paul, age 26, is a resident of Puerto Rico. 
 
Facts 
 
 In February 2021, Paul promoted a crypto asset security on Twitter in exchange for 
a payment of crypto assets, valued at approximately $25,019. Paul, at the time of his promotion, 
had approximately 3.8 million Twitter followers. 
 
 Specifically, Paul promoted a security being publicly offered by Tron Foundation 
Limited (“Tron”), and Tron’s owner and control person Yuchen (Justin) Sun (“Sun”), called 
“Tronix” tokens (“TRX”). TRX tokens are offered and sold as investment contracts, and therefore 
constitute securities pursuant to Section 2(a)(1) of the Securities Act. 
 
 From August 2017 to the present, Tron and Sun have engaged in the continuous 
public offer and sale of TRX tokens. Based on Tron’s and Sun’s offering materials and public 
statements, purchasers of TRX tokens would have had a reasonable expectation of profits from 
their investment in the tokens. Tron and Sun explicitly promoted TRX as an investment and touted 
the potential for significant returns to investors through buying, holding, and trading TRX tokens. 
Tron and Sun worked to list TRX on numerous crypto asset trading platforms, including within the 
United States, and publicly encouraged investors to purchase TRX through the new venues. Tron 
and Sun routinely touted the market capitalization, price, and trading volume of TRX, and 
published articles advising followers of purportedly opportunistic times to “invest” in TRX. 
 
 Based on Tron’s and Sun’s public statements, purchasers of the TRX tokens would 
have had a reasonable expectation that Tron and Sun would expend significant efforts to develop 
the Tron platform and a secondary trading market for TRX, which would increase the value of 
TRX tokens and drive investor profits. Tron’s offering materials and marketing communications 
highlighted that the value of TRX depended entirely on Tron’s efforts to develop and grow the 
Tron platform and drive demand for the token, thereby increasing its price on the secondary 
market. Tron’s social media accounts and websites highlighted its profitability, accelerated growth, 
and the team’s credentials and experience to demonstrate that the company would be able to 
implement its business plan effectively. 
 

 3 
 Paul promoted the TRX offering on social media by posting the following to his 
Twitter account on February 12, 2021: 
 
 
 
 Tron, through an intermediary, paid Paul in crypto assets, valued at approximately 
$25,019, for this promotion and provided Paul with the specific language to include in the Tweet. 
Paul did not disclose that he had been paid by Tron, or the amount of compensation he received 
from Tron and Sun for promoting the TRX offering on Twitter. 
 
 Paul’s crypto asset security promotion occurred after the Commission warned in its 
July 25, 2017, DAO Report of Investigation that digital tokens or coins offered and sold may be 
securities, and those who offer and sell securities in the United States must comply with the federal 
securities laws.
2
 The promotion also occurred nearly four years after the Commission’s Division of 
Enforcement and Office of Compliance Inspections and Examinations issued a statement 
reminding market participants that “[a]ny celebrity or other individual who promotes a virtual 
token or coin that is a security must disclose the nature, scope, and amount of compensation 
received in exchange for the promotion. A failure to disclose this information is a violation of the 
anti-touting provisions of the federal securities laws.”
3
 
 
Paul Violated Section 17(b) of the Securities Act 
 
 Section 17(b) of the Securities Act makes it unlawful for any person to: publish, 
give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, 
investment service, or communication which, though not purporting to offer a security for sale, 
describes such security for a consideration received or to be received, directly or indirectly, from 
an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, 
of such consideration and the amount thereof. 
                                                 
2
 Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The 
DAO, Exchange Act Rel. No. 81207 (July 25, 2017). 
 
3
 See SEC Staff Statement Urging Caution Around Celebrity Backed ICOs (Nov. 1, 2017), 
available at https://www.sec.gov/news/public-statement/statement-potentially-unlawful-
promotion-icos.  

 4 
 
 Paul violated Section 17(b) of the Securities Act by touting the TRX token offering 
on his Twitter account without disclosing that he received compensation from the issuer for doing 
so, and the amount of the consideration. 
 
Disgorgement and Civil Penalties 
 
 The disgorgement and prejudgment interest ordered in paragraph IV.C is consistent 
with equitable principles and does not exceed Respondent’s net profits from his violations and will 
be distributed to harmed investors, if feasible. The Commission will hold funds paid pursuant to 
paragraph IV.C in an account at the United States Treasury pending a decision whether the 
Commission in its discretion will seek to distribute funds. If a distribution is determined feasible 
and the Commission makes a distribution, upon approval of the distribution final accounting by the 
Commission, any amounts remaining that are infeasible to return to investors, and any amounts 
returned to the Commission in the future that are infeasible to return to investors, may be 
transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange 
Act.   
 
Undertakings 
 
 Respondent has undertaken to: 
 
a. for a period of three (3) years from the date of this Order, forgo receiving or 
agreeing to receive any form of compensation or consideration, directly or 
indirectly, from any issuer, underwriter, or dealer, for directly or indirectly 
publishing, giving publicity to, or circulating any notice, circular, 
advertisement, newspaper, article, letter, investment service, or communication 
which, though not purporting to offer a crypto asset security for sale, describes 
such crypto asset security; and 
 
b. continue to cooperate with the Commission’s investigation in this matter. 
 
 In determining whether to accept the Offer, the Commission has considered these 
undertakings. 
 
IV. 
 
 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 
agreed to in Respondent’s Offer. 
 
 Accordingly, it is hereby ORDERED that: 
  
A. Pursuant to Section 8A of the Securities Act, Respondent cease and desist from 
committing or causing any violations and any future violations of Section 17(b) of the Securities 
Act. 

 5 
 
B. Respondent shall comply with the undertakings enumerated in Section III, paragraph 
13(a) above. 
 
C. Respondent shall, within 20 days of the entry of this Order, pay disgorgement of 
$25,019, prejudgment interest of $1,811, and a civil money penalty in the amount of $75,057 to the 
Securities and Exchange Commission. The Commission may distribute the funds paid pursuant to 
this paragraph if, in its discretion, the Commission orders the establishment of a Fair Fund pursuant 
to 15 U.S.C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002. The Commission will hold 
funds paid pursuant to this paragraph in an account at the United States Treasury pending a decision 
whether the Commission, in its discretion, will seek to distribute funds or, subject to Exchange Act 
Section 21F(g)(3), transfer them to the general fund of the United States Treasury. If timely 
payment of disgorgement and prejudgment interest is not made, additional interest shall accrue 
pursuant to SEC Rule of Practice 600.  If timely payment of a civil money penalty is not made, 
additional interest shall accrue pursuant to 31 U.S.C. § 3717. 
 
D. Payment must be made in one of the following ways:   
 
(1) Respondent may transmit payment electronically to the Commission, which 
will provide detailed ACH transfer/Fedwire instructions upon request;  
 
(2) Respondent may make direct payment from a bank account via Pay.gov 
through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  
 
(3) Respondent may pay by certified check, bank cashier’s check, or United 
States postal money order, made payable to the Securities and Exchange 
Commission and hand-delivered or mailed to:  
 
Enterprise Services Center 
Accounts Receivable Branch 
HQ Bldg., Room 181, AMZ-341 
6500 South MacArthur Boulevard 
Oklahoma City, OK 73169 
 
Payments by check or money order must be accompanied by a cover letter identifying Jake Joseph 
Paul as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 
cover letter and check or money order must be sent to David Hirsch, Chief, Crypto Assets and 
Cyber Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 
Washington, DC 20549.  
 
E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 
treated as penalties paid to the government for all purposes, including all tax purposes.  To preserve 
the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, he 
shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any award of 
compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in this 

 6 
action (“Penalty Offset”).  If the court in any Related Investor Action grants such a Penalty Offset, 
Respondent agrees that he shall, within 30 days after entry of a final order granting the Penalty 
Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to 
the Securities and Exchange Commission.  Such a payment shall not be deemed an additional civil 
penalty and shall not be deemed to change the amount of the civil penalty imposed in this 
proceeding.  For purposes of this paragraph, a “Related Investor Action” means a private damages 
action brought against Respondent by or on behalf of one or more investors based on substantially 
the same facts as alleged in the Order instituted by the Commission in this proceeding. 
 
V. 
It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 
523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 
Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 
amounts due by Respondent under this Order or any other judgment, order, consent order, decree 
or settlement agreement entered in connection with this proceeding, is a debt for the violation by 
Respondent of the federal securities laws or any regulation or order issued under such laws, as set 
forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 
 
 
 By the Commission. 
 
 
 
Vanessa A. Countryman 
Secretary 
 
 

UNITED STATES OF AMERICA 

Before the 

SECURITIES AND EXCHANGE COMMISSION 

 

SECURITIES ACT OF 1933 

Release No. 11171 / March 22, 2023 

 

ADMINISTRATIVE PROCEEDING 

File No. 3-21347 

 

In the Matter of 

 

Jake Joseph Paul 

 

Respondent. 

 

 

 

 

ORDER INSTITUTING CEASE-AND-

DESIST PROCEEDINGS PURSUANT TO 

SECTION 8A OF THE SECURITIES ACT 

OF 1933, MAKING FINDINGS, AND 

IMPOSING A CEASE-AND-DESIST 

ORDER  

  

I. 
 

 The Securities and Exchange Commission (“Commission”) deems it appropriate that cease-

and-desist proceedings be, and hereby are, instituted pursuant to Section 8A of the Securities Act 

of 1933 (“Securities Act”), against Jake Joseph Paul (“Paul” or “Respondent”). 

 

II. 
 

 In anticipation of the institution of these proceedings, Respondent has submitted an Offer 

of Settlement (the “Offer”) which the Commission has determined to accept. Solely for the purpose 

of these proceedings and any other proceedings brought by or on behalf of the Commission, or to 

which the Commission is a party, and without admitting or denying the findings herein, except as 

to the Commission’s jurisdiction over him and the subject matter of these proceedings, which are 

admitted, and except as provided herein in Section V, Respondent consents to the entry of this 

Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 

1933, Making Findings, and Imposing a Cease-and-Desist Order (“Order”), as set forth below.   

 

III. 
 

 On the basis of this Order and Respondent’s Offer, the Commission finds1 that: 

 

                                                 
1 The findings herein are made pursuant to Respondent's Offer of Settlement and are not binding on 

any other person or entity in this or any other proceeding. 

 

 



 2 

Summary 

 

 On February 12, 2021, Paul—a well-known internet personality and professional 

boxer—touted on social media a crypto asset security that was being offered and sold. Paul did not 

disclose that he was being paid to give publicity to such security by the entity offering and selling 

it to the public. Paul’s failure to disclose this compensation violated Section 17(b) of the Securities 

Act, which makes it unlawful for any person to promote a security without fully disclosing the 

receipt and amount of such compensation from an issuer. 

 

Respondent  

 

 Paul, age 26, is a resident of Puerto Rico. 

 

Facts 

 

 In February 2021, Paul promoted a crypto asset security on Twitter in exchange for 

a payment of crypto assets, valued at approximately $25,019. Paul, at the time of his promotion, 

had approximately 3.8 million Twitter followers. 

 

 Specifically, Paul promoted a security being publicly offered by Tron Foundation 

Limited (“Tron”), and Tron’s owner and control person Yuchen (Justin) Sun (“Sun”), called 

“Tronix” tokens (“TRX”). TRX tokens are offered and sold as investment contracts, and therefore 

constitute securities pursuant to Section 2(a)(1) of the Securities Act. 

 

 From August 2017 to the present, Tron and Sun have engaged in the continuous 

public offer and sale of TRX tokens. Based on Tron’s and Sun’s offering materials and public 

statements, purchasers of TRX tokens would have had a reasonable expectation of profits from 

their investment in the tokens. Tron and Sun explicitly promoted TRX as an investment and touted 

the potential for significant returns to investors through buying, holding, and trading TRX tokens. 

Tron and Sun worked to list TRX on numerous crypto asset trading platforms, including within the 

United States, and publicly encouraged investors to purchase TRX through the new venues. Tron 

and Sun routinely touted the market capitalization, price, and trading volume of TRX, and 

published articles advising followers of purportedly opportunistic times to “invest” in TRX. 

 

 Based on Tron’s and Sun’s public statements, purchasers of the TRX tokens would 

have had a reasonable expectation that Tron and Sun would expend significant efforts to develop 

the Tron platform and a secondary trading market for TRX, which would increase the value of 

TRX tokens and drive investor profits. Tron’s offering materials and marketing communications 

highlighted that the value of TRX depended entirely on Tron’s efforts to develop and grow the 

Tron platform and drive demand for the token, thereby increasing its price on the secondary 

market. Tron’s social media accounts and websites highlighted its profitability, accelerated growth, 

and the team’s credentials and experience to demonstrate that the company would be able to 

implement its business plan effectively. 

 



 3 

 Paul promoted the TRX offering on social media by posting the following to his 

Twitter account on February 12, 2021: 

 

 
 

 Tron, through an intermediary, paid Paul in crypto assets, valued at approximately 

$25,019, for this promotion and provided Paul with the specific language to include in the Tweet. 

Paul did not disclose that he had been paid by Tron, or the amount of compensation he received 

from Tron and Sun for promoting the TRX offering on Twitter. 

 

 Paul’s crypto asset security promotion occurred after the Commission warned in its 

July 25, 2017, DAO Report of Investigation that digital tokens or coins offered and sold may be 

securities, and those who offer and sell securities in the United States must comply with the federal 

securities laws.2 The promotion also occurred nearly four years after the Commission’s Division of 

Enforcement and Office of Compliance Inspections and Examinations issued a statement 

reminding market participants that “[a]ny celebrity or other individual who promotes a virtual 

token or coin that is a security must disclose the nature, scope, and amount of compensation 

received in exchange for the promotion. A failure to disclose this information is a violation of the 

anti-touting provisions of the federal securities laws.”3 

 

Paul Violated Section 17(b) of the Securities Act 

 

 Section 17(b) of the Securities Act makes it unlawful for any person to: publish, 

give publicity to, or circulate any notice, circular, advertisement, newspaper, article, letter, 

investment service, or communication which, though not purporting to offer a security for sale, 

describes such security for a consideration received or to be received, directly or indirectly, from 

an issuer, underwriter, or dealer, without fully disclosing the receipt, whether past or prospective, 

of such consideration and the amount thereof. 

                                                 
2 Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The 

DAO, Exchange Act Rel. No. 81207 (July 25, 2017). 

 
3 See SEC Staff Statement Urging Caution Around Celebrity Backed ICOs (Nov. 1, 2017), 

available at https://www.sec.gov/news/public-statement/statement-potentially-unlawful-

promotion-icos.  



 4 

 

 Paul violated Section 17(b) of the Securities Act by touting the TRX token offering 

on his Twitter account without disclosing that he received compensation from the issuer for doing 

so, and the amount of the consideration. 

 

Disgorgement and Civil Penalties 
 

 The disgorgement and prejudgment interest ordered in paragraph IV.C is consistent 

with equitable principles and does not exceed Respondent’s net profits from his violations and will 

be distributed to harmed investors, if feasible. The Commission will hold funds paid pursuant to 

paragraph IV.C in an account at the United States Treasury pending a decision whether the 

Commission in its discretion will seek to distribute funds. If a distribution is determined feasible 

and the Commission makes a distribution, upon approval of the distribution final accounting by the 

Commission, any amounts remaining that are infeasible to return to investors, and any amounts 

returned to the Commission in the future that are infeasible to return to investors, may be 

transferred to the general fund of the U.S. Treasury, subject to Section 21F(g)(3) of the Exchange 

Act.   

 

Undertakings 
 

 Respondent has undertaken to: 

 

a. for a period of three (3) years from the date of this Order, forgo receiving or 

agreeing to receive any form of compensation or consideration, directly or 

indirectly, from any issuer, underwriter, or dealer, for directly or indirectly 

publishing, giving publicity to, or circulating any notice, circular, 

advertisement, newspaper, article, letter, investment service, or communication 

which, though not purporting to offer a crypto asset security for sale, describes 

such crypto asset security; and 

 

b. continue to cooperate with the Commission’s investigation in this matter. 

 

 In determining whether to accept the Offer, the Commission has considered these 

undertakings. 

 

IV. 

 

 In view of the foregoing, the Commission deems it appropriate to impose the sanctions 

agreed to in Respondent’s Offer. 

 

 Accordingly, it is hereby ORDERED that: 

  

A. Pursuant to Section 8A of the Securities Act, Respondent cease and desist from 

committing or causing any violations and any future violations of Section 17(b) of the Securities 

Act. 



 5 

 

B. Respondent shall comply with the undertakings enumerated in Section III, paragraph 

13(a) above. 

 

C. Respondent shall, within 20 days of the entry of this Order, pay disgorgement of 

$25,019, prejudgment interest of $1,811, and a civil money penalty in the amount of $75,057 to the 

Securities and Exchange Commission. The Commission may distribute the funds paid pursuant to 

this paragraph if, in its discretion, the Commission orders the establishment of a Fair Fund pursuant 

to 15 U.S.C. § 7246, Section 308(a) of the Sarbanes-Oxley Act of 2002. The Commission will hold 

funds paid pursuant to this paragraph in an account at the United States Treasury pending a decision 

whether the Commission, in its discretion, will seek to distribute funds or, subject to Exchange Act 

Section 21F(g)(3), transfer them to the general fund of the United States Treasury. If timely 

payment of disgorgement and prejudgment interest is not made, additional interest shall accrue 

pursuant to SEC Rule of Practice 600.  If timely payment of a civil money penalty is not made, 

additional interest shall accrue pursuant to 31 U.S.C. § 3717. 

 

D. Payment must be made in one of the following ways:   

 

(1) Respondent may transmit payment electronically to the Commission, which 

will provide detailed ACH transfer/Fedwire instructions upon request;  

 

(2) Respondent may make direct payment from a bank account via Pay.gov 

through the SEC website at http://www.sec.gov/about/offices/ofm.htm; or  

 

(3) Respondent may pay by certified check, bank cashier’s check, or United 

States postal money order, made payable to the Securities and Exchange 

Commission and hand-delivered or mailed to:  

 

Enterprise Services Center 

Accounts Receivable Branch 

HQ Bldg., Room 181, AMZ-341 

6500 South MacArthur Boulevard 

Oklahoma City, OK 73169 

 

Payments by check or money order must be accompanied by a cover letter identifying Jake Joseph 

Paul as a Respondent in these proceedings, and the file number of these proceedings; a copy of the 

cover letter and check or money order must be sent to David Hirsch, Chief, Crypto Assets and 

Cyber Unit, Division of Enforcement, Securities and Exchange Commission, 100 F St., NE, 

Washington, DC 20549.  

 

E. Amounts ordered to be paid as civil money penalties pursuant to this Order shall be 

treated as penalties paid to the government for all purposes, including all tax purposes.  To preserve 

the deterrent effect of the civil penalty, Respondent agrees that in any Related Investor Action, he 

shall not argue that he is entitled to, nor shall he benefit by, offset or reduction of any award of 

compensatory damages by the amount of any part of Respondent’s payment of a civil penalty in this 

http://www.sec.gov/about/offices/ofm.htm


 6 

action (“Penalty Offset”).  If the court in any Related Investor Action grants such a Penalty Offset, 

Respondent agrees that he shall, within 30 days after entry of a final order granting the Penalty 

Offset, notify the Commission's counsel in this action and pay the amount of the Penalty Offset to 

the Securities and Exchange Commission.  Such a payment shall not be deemed an additional civil 

penalty and shall not be deemed to change the amount of the civil penalty imposed in this 

proceeding.  For purposes of this paragraph, a “Related Investor Action” means a private damages 

action brought against Respondent by or on behalf of one or more investors based on substantially 

the same facts as alleged in the Order instituted by the Commission in this proceeding. 

 

V. 

It is further Ordered that, solely for purposes of exceptions to discharge set forth in Section 

523 of the Bankruptcy Code, 11 U.S.C. §523, the findings in this Order are true and admitted by 

Respondent, and further, any debt for disgorgement, prejudgment interest, civil penalty or other 

amounts due by Respondent under this Order or any other judgment, order, consent order, decree 

or settlement agreement entered in connection with this proceeding, is a debt for the violation by 

Respondent of the federal securities laws or any regulation or order issued under such laws, as set 

forth in Section 523(a)(19) of the Bankruptcy Code, 11 U.S.C. §523(a)(19). 

 

 

 By the Commission. 

 

 

 

Vanessa A. Countryman 

Secretary