The U.S Securities and Exchange Commission (SEC) has slammed fraud charges on Floyd Mayweather Jr. American professional boxer and Dj Khaled, Music producer for promoting investments in initial Cryptocurrency coin offerings without revealing that they had been paid to do so.
According to CNN, both Khaled, 43, and Mayweather, 41, were charged on Thursday, for promoting the initial coin offering (ICO) of a new form of cryptocurrency from Centra to their vast network of social media followers, without telling those followers they were being paid to do so.
The SEC has said that cryptocurrency coins in ICOs may be considered securities thereby subject to federal securities laws. Mayweather and Khalid however agreed to pay multiple fines that have a combined sum of over $750,000, which may not shake the bank accounts of either of them, though it is quite high.
As part of their settlement, Mayweather and Khaled agreed not to promote any securities, including digital ones, for three and two years, respectively. The case is something of a landmark in the world of cryptocurrency, as it is the first time the SEC has brought up charges against individuals for promoting ICOs.
Below is a press release from the SEC that describes their transgressions and punishments.
The SEC's orders found that Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech Inc., and that Khaled failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media accounts as a "Game changer."
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…"
A post on Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: "You can call me Floyd Crypto Mayweather from now on." The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.
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.