Celebrities Pay Hefty SEC Fines for Unlawfully Tweeting and Promoting ICOs
The US Securities and Exchange Commission announced Thursday that they’ve settled charges against professional boxer Floyd Mayweather Jr. and music producer DJ Khaled for failing to report payments they received for promoting initial coin offerings (ICOs).
These are the first charges of their kind and come in the wake of an SEC investigative report warning that ICO coins may be securities and any parties involved must comply with federal securities laws.
Mayweather received payments from three different ICOs, all of which he failed to disclose. Khaled was paid $50,000 from Centra Tech Inc. to tout the coin as a “game changer” on his social media accounts.
The SEC filed charges against the founders of Centra Tech in April, alleging that the ICO was fraudulent.
— Floyd Mayweather (@FloydMayweather) September 18, 2017
Mayweather also accepted $200,000 from two other ICOs.
In an Instagram post promoting Hubii.Network ICO, Mayweather dubbed himself “Floyd Crypto Mayweather,” a nod to his “Money Mayweather” nickname.
Although they did not admit guilt, the two media stars agreed to pay disgorgement, penalties and interest. 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.
Additionally, they both agreed to abstain from promoting any type of securities – Mayweather for three years, Khaled for two years.
According toS tephanie Avakian, co-director of the SEC Enforcement Division,
“These cases highlight the importance of full disclosure to investors. With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Enforcement Division co-director Steven Peikin adds,
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. 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.”