DJ Khaled and Floyd Mayweather Charged by SEC for Promoting ICOs Without Disclosing Payments

Promoting initial coin offerings without disclosing payments for the efforts has social media celebrities DJ Khaled and Floyd Mayweather Jr. in trouble with the U.S. Securities and Exchange Commission.

According to the agency, the hip-hop mogul and the retired boxer failed to disclose payments for promoting investments in ICOs, resulting in fines and other penalties.

The SEC stated it has settled charges with Khaled and Mayweather after it found the two did not disclose payments from Centra Tech Inc. of $100,000 and $50,000, respectively. The SEC also found that Mayweather failed to disclose payments from two other ICO issuers.

(In a statement, the agency admonished Khaled for calling Centra Tech a “Game changer” on one of his social media accounts, and Mayweather for stating on Twitter that Centra’s ICO “starts in a few hours. Get yours before they sell out, I got mine.”)

According to the SEC, neither Mayweather nor Khaled admitted or denied the agency’s findings, but did agree to penalties. Mayweather will pay $300,000 in disgorgement, a $300,000 penalty and $14,775 in prejudgment interest; and Khaled will pay $50,000 in disgorgement, a $100,000 penalty and $2,725 in prejudgment interest.

The SEC also stated that Mayweather said he will not to promote any securities, digital or otherwise, for three years, and that Khaled made a similar agreement for a term of two years.

The SEC further noted that these are the first two cases stemming from ICO-related violations.

“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” SEC enforcement division co-director Steven Peikin said in a statement. “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.”

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