Since the initial offering of their cryptocurrency coin, the Securities and Exchange Commission have charged boxer Floyd Mayweather Jr. and music producer DJ Khaled. They have been charged for not documenting the use received payments from their cryptocurrency. As per SEC, Initial Coin Offerings or ICO that sells cryptocurrency coins are subject to federal securities laws.
On Thursday, SEC said that both Mayweather and Khaled opted not to promote any securities for 2-3 years with the inclusion of the digital ones. Aside from this, they will also pay penalties and interest to the SEC plus the agreement that they will return the money received out of the cryptocurrency coins.
The two celebrities promoted Centra’s ICO, which has been separately charged by SEC for its fraudulent ICO. Mayweather and Khaled posted on their respective social media accounts how ICO was a game changer and encourages their followers to take part in this kind of business.
Non-Disclosure of Payment Under Investigation
Mayweather was not able to reveal the payment amounting to $300,000 from three different issuers of ICO and $100,000 from Centra Tech. Khaled, on the other hand, failed to disclose the sum of $50,000 from the same company.
SEC also informed the public and prospective investors to be cautious of celebrities endorsing ICOs making it clear that ICOs can also be fraudulent. Stephanie Avakian, co-director of SEC Enforcement Division, stated that because of the non-disclosure of the payments, the promotion of the ICO by Mayweather and Khaled seemed to be impartial, claiming it was an endorsement.
Also, Steven Peikin, one of the co-directors from the SEC enforcement division, said that social media influencers are not investment professionals but are paid promoters. The first time for SEC to call out charges against people that are promoting ICOs. The investigation is still in progress.