Boxer Floyd Mayweather, music producer DJ Khaled charged
The US Securities and Exchange Commission has announced settled charged against two celebrities for failing to disclose payments they received for promoting ICO investments.
The charges against professional boxer Floyd Mayweather and music producer Khaled Khaled aka DJ Khaled are the SEC’s first for touting violations involving ICOs.
Mayweather promoted the ICO investments on his social media accounts, including a Twitter post relating to an ICO from Centra Tech Inc. where he urged followers “Get yours before they sell out, I got mine…" He was paid $100,000 for promoting the ICO but did not disclose it.
DJ Khaled also promoted Centra Tech’s ICO on Twitter, calling it a “Game changer.” He did not disclose a $50,000 payment for the promotion.
Mayweather also promoted two other ICOs for which he was paid $200,000. In one tweet he said: “You can call me Floyd Crypto Mayweather from now on."
"These cases highlight the importance of full disclosure to investors," said Enforcement Division Co-Director Stephanie Avakian. "With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."
Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties and interest. Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. In addition, Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years. Mayweather also agreed to continue to cooperate with the investigation.
Warning to promoters
The SEC issued a warning in 2017 that coins sold in ICOs may be securities meaning that those offering and selling them are subject to securities laws.
"Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements," said Enforcement Division Co-Director Steven Peikin. "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."
Floyd Mayweather and DJ Khaled settle with the SEC for hyping initial coin offerings https://t.co/TQoyXLT6sC
— Bloomberg Crypto (@crypto) November 30, 2018
