DJ Khaled and Floyd Mayweather Jr have been charged by the Securities and Exchange Comission (SEC) for failing to disclose that they were paid to endorse fraudulent initial coin offerings (ICOs).
The SEC said that these are the first cases to charge touting violations involving ICOs.
Mayweather has been charged with failing to disclose promotional payments from three ICO issuers, including a $100,000 promotional payment from Centra Tech.
Khaled also failed to disclose a $50,000 payment he received for touting Centra Tech’s ICO on his social media accounts.
In addition to the Centra Tech payment, Mayweather also failed to disclose that he was paid $200,000 to promote two other ICOs.
The SEC said that Mayweather and Khaled agreed to pay disgorgement, penalties, and interest without admitting or denying the findings.
Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.
Mayweather and Khaled agreed not to endorse any securities in the next three and two years respectively.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” said SEC enforcement division co-director Steven Peikin.
“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.”
— Floyd Mayweather (@FloydMayweather) September 18, 2017
Main image credit: My Broadband.
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