The US Securities and Exchange Commission (SEC) has accused professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled of illegally announcing initial currency offers (ICOs), according to a press release issued on 29 November.
According to the announcement, the SEC concluded that Mayweather had not disclosed the promotional payments of three ICO issuers, including $ 100,000 from Centra Tech, a cryptocurrency startup, while Khaled, also known as DJ Khaled, did not disclose a payment of 50 000 USD from the same company.
In May, Centra's three co-founders – Sohrab Sharma, Robert Farkas and Raymond Trapani – were formally charged with leading a fraudulent OIC, which raised $ 32 million in investors in 2017.
Although neither party acknowledged or rebutted the charges against them, they agreed to pay certain fees and restrictions. Mayweather will pay $ 300,000 in restitution, a $ 300,000 fine and $ 14,775 in prejudgment interest. Khaled will pay $ 50,000 in restitution, a fine of $ 100,000 and $ 2,725 in prejudgment interest.
In addition, Mayweather has agreed to collaborate on the survey and not promote any type of securities over the next three years. Khaled has been banned from promoting securities for two years. Steven Peikin, co-director of the SEC's Law Enforcement Division, commented on the problem:
"Investors need to be skeptical about investment notices posted on social media platforms, and should not make decisions based on celebrity endorsements." Social media influencers are often paid promoters, not professionals of the investment, and the titles they boast, whether or not they are issued using traditional or blockchain certificates, could be frauds ".
Mayweather began promoting Centra's OIC in September 2017, claiming that he was already using his Titanium Centra card to use digital currencies such as Bitcoin (BTC) and Ethereum (ETH) in his commercial transactions. At that time, the Centra CIO was the third IOC promoted by Mayweather.
A few weeks later, Khaled joins Mayweather to promote Centra's OIC by making the acquisition of the Titanium Centra Card public on his Instagram account.
Later in November 2017, the SEC warned that celebrity-endorsed ICOs could be illegal. The commission said that personalities who promote token sales could violate anti-revenge laws if they do not reveal the compensation received from them.