By CultureBanx Team
- Floyd Mayweather & DJ Khaled Charged by the SEC for promoting ICOs
- Centra paid Mayweather $100,000 and Khaled $50,000
Floyd Mayweather’s money team may be looking for a new endorsement deal and DJ Khaled will need some new keys, after the Securities and Exchange Commission (SEC) charged them with promoting investments in initial coin offerings (ICO), without revealing they’d been paid.The SEC had previously warned celebrities about endorsing ICOs without proper disclosure around the nature and amount of their compensation.
Why This Matters: This is the first time the SEC has brought charges against individuals for promoting ICOs. Mayweather’s back was pushed against the ropes after the co-founders of Centra an ICO were arrested on fraud charges back in April. Centra raised $32 million from investors and sold unregistered investments through a “CTR Token,” the SEC alleged. Neither Mayweather nor DJ Khaled were named in that suit, though both were named “official brand ambassador and managing partner” at Centra.
“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,” said Steven Peikin, SEC enforcement division director.
As part of their settlement the two men agreed to give the money they’d received from Centra to the SEC and pay penalties and interest
Let’s breakdown how this all shakes out for these two celebrities. Mayweather failed to disclose that he’d received $100,000 from Centra and Khaled failed to disclose a payment of $50,000 from the same company. Both men settled with the SEC without admitting or denying the findings. They also agreed not to promote any securities, even digital ones, Khaled for two years and Mayweather for three years.
As part of their settlement the two men agreed to give the money they’d received from Centra to the SEC and pay penalties and interest. Mayweather will shell out $300,000 in penalties and $14,775 in interest. Khaled agreed to cough up $100,000 in penalties, and $2,725 in interest.
Situational Awareness: Creators of new digital currencies like ICOs sell a certain amount of the currency, usually before they’ve finished the software and technology that underpins it. These offerings have traditionally operated outside the regulatory framework meant to protect investors, although that’s starting to change as more governments examine the practice.
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