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The Securities and Exchange Commission (SEC) announced the charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to communicate payments received for the promotion of Initial Coin Offerings (ICO).
The charges against the two celebrities are the first cases to be charged by promoting violations involving ICO.
The SEC found that Mayweather did not disclose promotional payments from three ICO broadcasters, while Khaled never revealed a $ 50,000 payment from Centra Tech, which he promoted on his social accounts as a "game change." And an Instagram post from Mayweather predicted that he would have to make a large amount of money on another ICO, while a Twitter post said, "You can call me Floyd Crypto Mayweather from now on."
In April, the SEC commissioned the two founders of Centra Tech Inc – which Mayweather also promoted on social media – for a fraudulent ICO that raised over $ 32 million.
Without admitting or denying the charges, Mayweather agreed to pay $ 300,000 in disgorgement, a $ 300,000 fine and $ 14,775 in injury interest, while Khaled will pay $ 50,000 in disgorgement, $ 100,000 in penalties and $ 2,725 in injury interest.
Furthermore, both men have agreed not to promote any digital or other titles for three years. Mayweather has also agreed to collaborate in the investigation, which is ongoing.
"These cases underscore the importance of complete disclosure to investors," said Stephanie Avakian, Co-Director of the Enforcement Division, in a press release. "Without any payment disclosure, Mayweather and Khaled & # 39; s ICO may have appeared to be impartial rather than paid endorsements."
"Investors should be skeptical of investment advice published on social media platforms and should not make decisions based on celebrity specializations," added co-director of Enforcement Steven Peikin. "Social media influencers are often paid promoters, not investment professionals, and the titles they are promoting, regardless of whether they are issued using traditional or blockchain certificates, could be frauds."
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