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DJ Khaled and Floyd Mayweather charged by US SEC for Illegally promoting Bitcoin
Boxer Floyd Mayweather Jr and music producer DJ Khaled will pay
thousands of dollars to settle charges that they violated US financial
laws. The US Securities and Exchange Commission announced the
settlement on Thursday as the US financial regulator said the men failed
to disclose payments they received to promote certain cryptocurrency
investments. The men neither admitted nor denied the claims, but
agreed to pay combined penalties totalling more than $750,000. The two
cases are the first the SEC has brought over touting violations
involving initial coin offerings or ICOs, a relatively new investment
vehicle associated with crypto-currencies. An ICO allows people to
invest in a company by buying "tokens" or "coins" that it issues.
Despite the new language, the SEC has warned investors that it views
many of the offerings as investments governed by existing securities
laws. Those rules require disclosure of payments in exchange for
publicity. In this case, the SEC said Mayweather received $300,000 to
promote three separate offerings, including one by Centra Tech, a Miami
company that the SEC accused of fraud in April. Mayweather's promotions
included a message to his Twitter followers that Centra's ICO "starts in
a few hours. Get yours before they sell out, I got mine…" Khaled was
paid $50,000 by the same company, the SEC said. The SEC said DJ Khaled
agreed to repay the $50,000 he received for the endorsement, as well as a
$100,000 fine and interest while Mayweather will repay the $300,000 he
received, as well as a $300,000 fine and interest. SEC Enforcement
Division Co-Director Steven Peikin said the cases were a reminder that
investors should "be sceptical of investment advice posted to social
media platforms, and should not make decisions based on celebrity
endorsements".
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