Professional pugilist Floyd Mayweather and music producer DJ Khaled have come to a settlement over illegal promotion with the US Securities and Exchange Commission (SEC). The charges relate to their promotion of an Initial Coin Offering (ICO).

The financial regulator accused the pair of failing to disclose payments made for promoting token sales. The SEC announced that the charges have now been settled.

The case started after three cryptocurrency startups, including Centra Tech, contacted Mayweather and DJ Khaled. They were asked to promote ICOs on social media. However, the duo did not inform their followers that these promotions were paid endorsements, breaking SEC rules.

Mayweather promoted Centra Tech’s ICO on his social media, saying, “Get yours before they sell out, I got mine…” He was paid $100,000 for this promotion.

Besides Centra Tech, Mayweather promoted two other ICOs. He tapped into investors’ hopes by predicting profits from these events. On Twitter, he even wrote, “You can call me Floyd Crypto Mayweather from now on.” For these promotions, he received an additional $200,000.

DJ Khaled was paid $50,000 by Centra Tech to call the ICO a “Game Changer” on Twitter.

SEC lawsuit targets Centra Tech fraud

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. The settlement over illegal promotion includes Mayweather paying 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.

In conclusion

Floyd Mayweather, the boxer, and DJ Khaled, a music producer, have settled with the SEC. They faced charges of illegally endorsing cryptocurrency ICOs. The settlement resulted in fines totaling $750,000. Both were banned from promoting ICOs and securities for five years combined.

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