Boxer Floyd Mayweather, Producer DJ Khaled Settle SEC Claims of Failing to Disclose ICO Promotions
The U.S. Securities and Exchange Commission announced on Thursday that it has settled separate allegations that boxer Floyd Mayweather, Jr. and hip-hop producer DJ Khaled failed to disclose promotional payments from initial coin offering issuers.
November 29, 2018 at 07:10 PM
3 minute read
The U.S. Securities and Exchange Commission announced Thursday that it has settled charges that boxer Floyd Mayweather Jr. and hip-hop music producer DJ Khaled, real name Khaled Khaled, failed to disclose promotional payments from initial coin offering issuers in separate cases.
In the orders announcing the settlements, the SEC alleged that Mayweather failed to disclose promotional payments from three ICO issuers, including a $100,000 payment from Centra Technology, Inc. Additionally, the SEC order found that Mayweather didn't disclose that he was paid $200,000 to promote the other two ICOs.
The SEC also alleged that Khaled failed to disclose a $50,000 payment from Centra Tech.
Both men allegedly bragged about the payments on social media accounts, according to the news release.
The celebrities allegedly made the promotions after the SEC already had issued an investigative report in 2017 warning that coins sold in ICOs may be securities and that those who make offerings and sell them in the U.S. have to comply with federal securities laws.
“These cases highlight the importance of full disclosure to investors,” Enforcement Division Co-Director Stephanie Avakian said in the SEC news 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 to or denying the findings, Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty and $14,775 in prejudgment interest.
Also without admitting or denying the charges, Khaled agreed to pay $50,000 in disgorgement, a $10,000 in penalty and $2,275 in prejudgment interest, according to the news release.
Both men agreed to not promote any kind of securities for three years. Mayweather further agreed to cooperate with the investigation.
Charles Spada of Lankler Siffert & Wohl in New York, attorney for Khaled, did not immediately respond to a request for comment.
Attorneys for Mayweather, James Sanders of Reed Smith in Los Angeles and Richard Wright of Wright Marsh & Levy in Las Vegas, also did not immediately respond to request for comment.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” Enforcement Division Co-Director Steven Peikin said in the news release.
“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,” he said.
The SEC's continuing probe is being conducted by Alison R. Levine of the New York Regional Office and Jon A. Daniels, Luke M. Fitzgerald, and John O. Enright of the Enforcement Division's cyber unit and is being supervised by Cyber Unit Chief Robert A. Cohen, according to the commission.
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