Undefeated boxing champion Floyd Mayweather Jr. and DJ Khaled, music producer, have been charged by the Securities and Exchange Commission (SEC) The Commission for unlawfully touting coin offerings.
In April 2018, the Commission filed a civil action against Centra’s founders, alleging that the ICO was fraudulent. The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges.
The two celebrities have been accused of promoting investments in initial cryptocurrency coin offerings without revealing that they’d been paid.
The Commission has released a statement that it has settled charges with Mayweather and DJ Khaled, which marks the first case to charge touting violations involving ICOs.
Mayweather was fined, as he failed to disclose promotional payments from three ICO issuers, including a $100,000 from Centra Tech Inc. On the other hand, DJ Khaled failed to disclose a $50,000 payment from Centra Tech as well.
On September 19, Mayweather published a promotional tweet in support of the Centra’s (CTR) ICO.
— Floyd Mayweather (@FloydMayweather) September 18, 2017
Mayweather will have to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest and has agreed not to promote any securities, digital or otherwise, for the next three years. DJ Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. In addition, Khaled agreed not to promote any securities for two years as well.
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“These cases highlight the importance of full disclosure to investors. With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements”, said the Enforcement Division Co-Director Stephanie Avakian.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds”, added the Enforcement Division Co-Director Steven Peikin.