Floyd Mayweather and DJ Khaled Settle With SEC Over Illegal ICOs Endorsement
Professional pugilist Floyd Mayweather and DJ Khaled, a music producer, have come to a settlement with the US Securities and Exchange Commission (SEC) over charges related to the promotion of an Initial Coin Offering (ICO).
The financial regulator, which accused the pair of failing to “disclose payments made in return for the promotion of token sales,” has announced that the charges have been settled.
For those not familiar with the case, it all started after three cryptocurrency startups – including Centra Tech – contacted Mayweather and DJ Khaled to promote their ICOs on social media. The duo, however, ran afoul of SEC rules when it failed to disclose to its online followers that the promotion was a paid endorsement.
Mayweather promoted Centra Tech’s ICO on his social media accounts saying, “Get yours before they sell out, I got mine…” he also received $100,000 as payment for the promotion.
In addition to Centra Tech, the boxer promoted “two other ICOs and tapped into would-be investor wishes for a return on investment by predicting that he would profit from the events.” As a pointer to that fact, Mayweather posted on his Twitter account: “You can call me Floyd Crypto Mayweather from now on.” For this particular promotion, he was paid an additional $200,000.
As for DJ Khaled, he was paid $50,000 by Centra Tech in return for calling the ICO a “Game Changer” on his Twitter feed.
The SEC later launched a civil action lawsuit against Centra Tech, alleging that the company was a fraudulent set-up. The SEC went further to accuse the founders, Robert Farka and Sohrab Sharma, of enticing investors with “false” promises of groundbreaking financial products. According to the SEC, the co-founders “created fictional executives with impressive biographies, posted false or misleading marketing materials to Centra’s website, and paid celebrities to tout the ICO on social media.” Farka and Sharma were later on arrested.
Even though Mayweather and Khaled did not admit to the charges by the SEC, they have, however, agreed to the settlement. A breakdown shows that Mayweather will pay a $300,000 penalty, a prejudgment interest of $14,775, and $300,000 in disgorgement – also referred to as alleged profits obtained illegally.
DJ Khaled is also not better off. He has agreed to pay $2,725 in prejudgment interest, a $100,000 penalty, and $50,000 in disgorgement.
In addition to the fees, Khaled has agreed not to promote any form of securities or ICOs for two years, while Mayweather will adhere to a similar requirement for three years.
Floyd Mayweather, the boxer, and DJ Khaled, a music producer, have settled with the SEC over charges of illegally endorsing cryptocurrency ICOs. The duo who were fined a total of $750,000 and were also banned from promoting ICOs and securities for a combined five years.
To keep up with the latest news in the world of cryptocurrency, subscribe to the ICOholder’s newsletter.