DJ Khaled & Floyd Mayweather Settle Charges From SEC After Failing to Disclose ICO Payments
DJ Khaled and Floyd Mayweather were big cryptocurrency promoters during the height of its investment popularity last year, but the two found themselves in some legal trouble over payments. The Securities and Exchange Commission, however, announced on Thursday (Nov. 29) they settled charges against the professional boxer and the music producer for failing to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs).
Khaled did not reveal a $50,000 payment from Centra Tech. He agreed to pay $50,000 in disgorgement, a $100,000 penalty and $2,725 in prejudgment interest. Both Mayweather and Khaled agreed not to promote any securities, digital or otherwise--Mayweather for three years, Khaled for two.
"These cases highlight the importance of full disclosure to investors," said Enforcement Division Co-Director Stephanie Avakian. "With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."
"Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements," said Enforcement Division Co-Director Steven Peikin. "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."