As per the press release published 29th Nov., the U.S. Securities and Exchange Commission (SEC) has fined professional boxer Floyd Mayweather and music producer Khaled Khaled for illegally advertising Initial Coin Offerings (ICOs).
According to the announcement, the SEC discovered that Floyd Mayweather didn’t disclose promotional payments from three ICO issuers, including $100,000 from digital currency startup Centra Tech, while DJ Khaled, failed to disclose to $50,000 payment from the same company.
In May’18, three co-founders of Centra – Robert Farkas, Raymond Trapani, and Shorab Sharma were formally accused of running a fraudulent ICO, which raised $32 billion from investors in 2017.
While neither of them confessed to nor dismissed the charges against them, they agreed to pay certain fees for rejections. Floyd Mayweather will pay $14,775 in prejudgment interest. DJ Khaled will pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.
Although, Floyd Mayweather agreed to partner with the investigation and not to promote any securities during the next three years. DJ Khaled has been banned from securities promotion for two years. SEC Enforcement Division Co-Director Mr. Steven Peikin said on the issue:
“Investors should be skeptical of investment advice posted to social media platforms, and shouldn’t make decisions based on celebrity endorsements. Social media influencers are usually paid promoters, not investment professionals, and the securities they’re promoting, despite whether they are issued using traditional certificates or on the blockchain, could be frauds.”
Floyd Mayweather started promoting Centra’s ICO in September 2017, asserting that he was now using his Titanium Centra card to use cryptocurrencies such as Bitcoin and Ethereum in his business transaction. At that point, Centra’s ICO was the third ICO being promoted by Mayweather.
A few weeks later, DJ Khaled joined Floyd Mayweather in endorsed Centra’s ICO by making public his acquisition of a Titanium Centra Card on his Instagram account.
In November’17, the SEC warned that ICOs that was promoted by celebrities could be unlawful. The commission asserted that personalities who promote token sales could be violating the “anti-touting” laws if they do not reveal the fee they got from their endorsements.