SEC Charges Floyd Mayweather and DJ Khaled With Cryptocurrency Violations
Music producer DJ Khaled and pro boxer Floyd Mayweather Jr. were charged by the Securities and Exchange Commission Thursday for touting initial coin offerings (ICOs) on social media without disclosing payments they received for promoting the cryptocurrency.
The SEC found that DJ Khaled failed to disclose a $50,000 payment he received from Centra Tech, which he promoted to his millions of social media followers as a “game changer.”
Mayweather failed to disclose promotional payment from three ICOs including $100,000 from Centra Tech, and another $200,000 from two other issues. Mayweather promoted Centra’s ICO to his Twitter followers saying, “starts in a few hours. Get yours before they sell out, I got mine…”
On Instagram, he wrote about making a large sum of money from another ICO and posted on Twitter saying, “You can call me Floyd Crypto Mayweather from now on.”
“These cases highlight the importance of full disclosure to investors,” said Enforcement Division Co-Director Stephanie Avakian in a press release. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Without admitting or denying the SEC’s findings, Mayweather and Khaled will settle the charges and have agreed to not endorse any securities — digital or otherwise — for three years and two years, respectively.
Khaled will repay the $50,000 he received for promotions in addition to a $100,000 penalty and interest. Mayweather will repay the $300,000 he was paid as well as a $300,000 fine and interest.
“Social media influencers are often paid promoters, not investment professionals,” said Enforcement Division Co-Director Steven Peikin. “The securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”
These are the SEC’s first cases brought over touting violations involving ICOs. The investigation is ongoing.