SEC Fines Floyd Mayweather, DJ Khaled for Illegal ICO Promotion
The U.S. Securities and Exchange Commission (SEC) has settled charges with champion boxer Floyd Mayweather Jr. and music producer DJ Khaled for promoting an illegal ICO last year. Both paid penalties collectively totaling more than $750,000 USD as part of an out-of-court settlement.
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Celebrities Pay Up for Illegal ICO Promotion
Per their settled charges, Floyd Mayweather and DJ Khaled agreed to pay upwards of $600,000 and $150,000 respectively in disgorgements, penalties, and prejudgment interest. The judgment marks the SEC’s first time cracking down on celebrities for illegally marketing token offerings.
The charges were principally related to the now-defunct crypto startup Centra Tech, though Mayweather promoted two unregistered ICOs beyond Centra.
Centra promised to offer a suite of financial products including digital currency debit cards. The company lied about having an association with traditional financial giants such as Bancorp and global payment processors Visa and MasterCard.
The celebrities hid the fact that the organizers paid them for advertising #tokens.
Mayweather was forbidden to advertise any securities for three years, and DJ Khaled – two. pic.twitter.com/9p4bgVjMsX
— CryptoWhale (@089kirill) November 30, 2018
According to the Commission, both celebrities violated federal securities laws by failing to disclose promotional fees they received for advertising an unregistered security, i.e. Centra.
“These cases highlight the importance of full disclosure to investors,” said SEC co-enforcement 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.”
Reportedly, Mayweather and Khaled were paid $100,000 and $50,000 respectively by Centra for hyping the play’s ICO on social media.
Watch Out, Celebrity Token Promoters
Last November, the Commission warned celebrities that promoting ICOs without disclosing associated compensations would run afoul of the law.
In April this year, the SEC filed criminal charges against Centra Tech’s founders for illicitly raising millions of dollars through an unregistered ICO. The Commission accused Centra’s founders of using a “sophisticated marketing campaign” to dupe investors.
Is the trend of illegal ICO promotion among celebrities over with? Share your views in the comments section.
Images via Pixabay