Boxing champion Floyd Mayweather Jr. and record producer DJ Khaled will pay hundreds of thousands of dollars in penalties to settle charges filed against them by the Securities and Exchange Commission.
The SEC charged Mayweather and Khaled with promoting an initial coin offerings (ICOs) without disclosing that they were paid for them.
Both Mayweather and Khaled touted the ICO of Centra Tech, which was later alleged to have been a scam.
Floyd Mayweather Jr. and DJ Khaled were two of the most well-known celebrities to jump on the cryptocurrency bandwagon last year.
Now their promotion of particular initial coin offerings has gotten them in trouble.
Mayweather, a former boxing champion, and Khaled, a record producer, will each pay more than $100,000 in fines to settle charges that they illegally promoted an initial coin offering without disclosing that they were paid for it, the Securities and Exchange Commission announced Thursday. They also both agreed to forgo promoting any other ICOs or stocks for multiple years, the SEC said.
“These cases highlight the importance of full disclosure to investors,” Stephanie Avakian, co-director of the SEC’s enforcement division, said in a statement. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Neither Mayweather nor Khaled admitted to or denied the charges.
They touted an ICO that officials say was a scam
Mayweather and Khaled were both paid by Centra Tech to to tout its controversial ICO last year, according to the SEC. Centra Tech paid Mayweather $100,000 and Khaled $50,000, the agency said. Both then promoted the ICO on their social media accounts to their followers, but neither disclosed that they were being paid to tout it, the SEC said.
Centra was supposed to be developing a debit card for cryptocurrencies. But federal law enforcement officials say it was really a fraudulent scheme, and have filed civil and criminal charges against its founders.
Read this: The SEC charges a third Centra cryptocurrency ‘mastermind’ with fraud over its $32 million ICO
Mayweather also was paid $200,000 to tout two other ICOs and failed to disclose the payments, according to the SEC.
As part of his settlement, Mayweather will hand over to the SEC the $300,000 he was paid to promote the three ICOs, pay a $300,000 fine, and pay $14,775 in interest, according to the agency. Khaled agreed to hand over the $50,000 he was paid by Centra and pay both a $100,000 fine and $2,725 in interest.
Mayweather will be barred from touting ICOs or other securities for three years; Khaled for two. Additionally, Mayweather will cooperate with the SEC’s investigation of Centra, the agency said.