Crypto Celebs DJ Khaled And Floyd Mayweather Charged By SEC For “Unlawfully Touting” ICOs
Music producer DJ Khaled and boxer Floyd Mayweather Jr. were imputed by the Securities and Exchange Commission(SEC) on Thursday with promoting investments in initial coin offerings without revealing that they'd been paid.
Khaled and Mayweather came to an agreement with the SEC and accepted not to sell any securities, including cryptos, for two years and three years respectively. They also agreed to give back the money they'd received to the SEC and pay penalties with interest. Notably, Mayweather neglected to reveal that he'd taken $300,000 from three distinct ICO issuers, including $100,000 from Centra Tech, while Khaled failed to disclose a payment of $50,000 from the same company.
Mayweather's promotional work for Centra composed of a message to his almost 8 million Twitter followers that said that the ICO, “starts in a few hours. Get yours before they sell out, I got mine…” On a much more social media, Instagram, Mayweather wrote to his over 22 million followers that he predicted he would make a lot of money from another ICO and posted on Twitter, “You can call me Floyd Crypto Mayweather from now on.”
On the other hand, Khaled has nearly 13 million followers on Instagram and another 4 million on Twitter and used his influence to promote ICOs, calling the Centra Tech ICO a “Game changer.”
These cases highlight the importance of full disclosure to investors.
“With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements,”
said Enforcement Division Co-Director Stephanie Avakian.
Enforcement Division Co-Director Steven Peikin added:
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”
There will be further investigation by the SEC which both the celebrities agreed to cooperate. Notably, just last year SEC had issued a statement saying that celebrities can not promote investment products if they do not disclose the source, nature and amount they were being compensated with.