The U.S. Securities and Exchange Commission (SEC) has charged skilled boxer Floyd Mayweather Jr. and music producer Khaled Khaled for unlawfully promoting Initial Coin Offerings (ICOs), in line with a press launch published Nov. 29.
Per the announcement, the SEC discovered that Mayweather didn’t disclose promotional funds from three ICO issuers, together with $100,000 from cryptocurrency startup Centra Tech, whereas Khaled, also referred to as DJ Khaled, did not disclose $50,000 fee from the identical firm.
Back in May, the three co-founders of Centra — Sohrab Sharma, Robert Farkas, and Raymond Trapani — had been formally indicted for working a fraudulent ICO, which raised $32 million from traders in 2017.
While neither get together admitted to nor denied the costs towards them, they agreed to pay sure charges and restrictions. Mayweather can pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment curiosity. Khaled can pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment curiosity.
Moreover, Mayweather agreed to collaborate with the investigation and to not promote any sort of securities throughout the subsequent three years. Khaled has been barred from securities promotion for two years. SEC Enforcement Division Co-Director Steven Peikin commented on the problem:
“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.”
Mayweather began selling Centra’s ICO in September 2017, claiming that he was already utilizing his Titanium Centra card to make use of digital currencies like Bitcoin (BTC) and Ethereum (ETH) in his enterprise transactions. At that point, Centra’s ICO was the third ICO being promoted by Mayweather.
Just a number of weeks later, Khaled joined Mayweather in selling Centra’s ICO by making public his acquisition of a Titanium Centra Card on his Instagram account.
Later in November 2017, the SEC warned that ICOs that had been endorsed by celebrities might be unlawful. The fee claimed that personalities who promote token gross sales might be violating the “anti-touting” legal guidelines if they don’t reveal the compensation they obtained from their endorsements.