Floyd Mayweather Jr. and DJ Khaled have been charged with unlawfully promoting cryptocurrency initial coin offerings, according to a press release from the SEC.
A new press release from the SEC revealed that two major celebrities have been charged in connection to their promotion of cryptocurrency projects. Professional boxer Floyd Mayweather Jr. and music producer DJ Khaled have both been charged with violating a law that compels them to inform their audiences that they had been paid to promote initial coin offerings.
For the uninitiated, initial coin offerings or ICOs, are the initial distribution of a digital currency. An SEC press release dives deeper into the pair’s failure to disclose that they had been paid to promote a specific cryptocurrency.
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.
Mayweather and Khaled’s promotions came after the SEC issued its DAO Report in 2017 warning that coins sold in ICOs may be securities and that those who offer and sell securities in the U.S. must comply with federal securities laws. In April 2018, the Commission filed a civil action against Centra’s founders, alleging that the ICO was fraudulent. The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges.
According to the SEC, “Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties and interest.”
The press release also says that Mayweather Jr., who may be worth as much as $1 billion, will pay over $600,000 in penalties for the violation. DJ Khaled, who is significantly less wealthy than Mayweather, will pay $150,000.
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