Floyd Mayweather Jr. and DJ Khaled hit with SEC ICO charges

 These are the SEC's first cases to charge touting violations involving ICOs

The US Securities and Exchange Commission (SEC) has charged boxer Floyd Mayweather Jr. and music producer Khaled Khaled (aka DJ Khaled) for unlawfully advertising Initial Coin Offerings (ICOs).

Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech, and Khaled did the same with a $50,000 payment from the same company, which he touted on his social media accounts as a “Game changer.” Mayweather’s promotions included a message to his Twitter followers that Centra’s ICO “starts in a few hours. Get yours before they sell out, I got mine…”

A post on the latter’s Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: “You can call me Floyd Crypto Mayweather from now on.”  The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.

Without admitting or denying the findings, he agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled will stump up $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. In addition, Mayweather will not promote any securities, digital or otherwise, for three years, and Khaled has been handed a similar ban for two years. Mayweather also agreed to cooperate with the SEC’s ongoing investigation.

“Investors should be sceptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” says 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.”

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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