According to a press release published on November 29, The US Securities and Exchange Commission(SEC) charged professional boxer Floyd Mayweather Jr. and music producer Khaled Mohamed Khaled (DJ Khaled) for illegally promoting Initially Coin Offerings(ICOs).
The SEC found that both celebrities failed to reveal the payments they received to promote security offerings. The two celebrities were among the prolific ICO promoters, encouraging crypto-tokens on social media platforms, which were paid advertisements.
The two celebrities had received promotional payments from three ICO issuers; Floyd failed to disclose $300,000 received from a cryptocurrency startup Centra Tech, and a Miami Company, while Khaled failed to reveal the $50,000 received from Centra Tech.
The celebrities neither admitted nor denied the claims, but then agreed to pay disgorgement, penalties, and interests of more than $750,000 to the SEC. Moreover, Floyd agreed not to promote securities for the next three years, while Khaled will not be promoting securities for two years.
Enforcement Division Co-Director Steven Peikin had this to say on the issue,
“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.”
The promotions from Mayweather’s side began in September 2017, stating that he was using digital currencies like Bitcoin(BTC) and Ethereum(ETH) using his Titanium Centra Card.
After a few weeks, Khaled paired with Mayweather for promoting Centra Tech’s ICO, announcing his procurement of Titanium Centra Card on his Instagram Account.
In November 2017, SEC had warned about the ICOs promoted by celebrities could be illegal. One of the founders of the Centra Tech ICO, which was declared as an unlawful securities offering, was charged with fraud.