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SEC Charges DJ Khaled, Floyd Mayweather Jr. With Illegally Promoting ICOs
FinTech, Blockchain, Financial Services
The Securities and Exchange Commission charged music producer DJ Khaled (real name Khaled Khaled) and boxing champ Floyd Mayweather Jr. with failing to disclose payments they received for promoting investments in a series of initial coin offerings (ICOs).
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.
Mayweather has also agreed not to promote any securities for three years, and Khaled will be banned for two years. Mayweather has agreed to corporate with the SEC in its investigation.
Here are the details of the transgressions, via the SEC:
The SEC’s orders found that Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech Inc., and that Khaled failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media accounts as a “Game changer.” Mayweather’s promotions included a message to his Twitter followers that Centra’s ICO “starts in a few hours. Get yours before they sell out, I got mine…”
A post on Mayweather’s Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: “You can call me Floyd Crypto Mayweather from now on.” The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” SEC Enforcement Division Co-Director Steven Peikin said in a statement. “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.”
Dubbing himself Floyd “Crypto” Mayweather, the boxing champ promoted an ICO for the Hubii Network on Twitter and Instagram just days before he defeated Conor McGregor last year in their massively hyped fight. He also participated in a coin offering by Stox, “a blockchain-based prediction market,” that quickly raised $30 million after Mayweather promoted the ICO on Instagram, as CoinDesk reported
Photo: Via Twitter