Floyd Mayweather and DJ Khaled’s Unlawful ICO Promotions
In a classic case of celebrity endorsement gone wrong, the U.S. Securities and Exchange Commission (SEC) has slapped professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled (better known as DJ Khaled) with charges for unlawfully promoting Initial Coin Offerings (ICOs). Now that’s one heavyweight bout you didn’t see coming!
The Details of the Charges
According to a press release issued on November 29, the SEC found that Mayweather and Khaled failed to disclose payments they received for promoting ICOs, including a cool $100,000 from Centra Tech for Mayweather and $50,000 for Khaled. If that doesn’t make you raise an eyebrow, I don’t know what will!
Centra Tech’s Sheepish Indictment
This isn’t Centra Tech’s first tango with the law. Back in May, the three co-founders—Sohrab Sharma, Robert Farkas, and Raymond Trapani—were indicted for running a fraudulent ICO that managed to rake in $32 million from investors back in 2017. Trust me; that’s no small change!
Financial Consequences
As the saying goes, “You gotta pay to play.” Mayweather has agreed to cough up $300,000 in disgorgement plus a penalty of another $300,000 along with $14,775 in prejudgment interest. Not to be outdone, Khaled will have to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. For both, it’s quite the pricy lesson in making sure to read the fine print!
Restrictions and Investor Advice
Now here comes the fun part—both celebrities will face restrictions moving forward. Floyd agreed not to promote any kind of securities for the next three years, while DJ Khaled got himself a two-year securities promotion ban. In the wise words of SEC Enforcement Division Co-Director, Steven Peikin: “Investors should be skeptical of investment advice posted to social media platforms… not all influencers are investment professionals!” Wise words, indeed!
Celebrity Endorsements—A Risky Business
Mayweather started promoting Centra’s ICO back in September 2017, claiming he was happily using his Titanium Centra card for Bitcoin and Ethereum transactions. Just a few weeks later, DJ Khaled jumped in, showcasing his new Titanium card to his millions of Instagram followers. November 2017 saw the SEC throwing down the gauntlet, reminding everyone that celebrity endorsements could be crossing legal lines without proper disclosures. So, glam it up all you want, folks, but maybe check where you’re putting your money!
