Khaled and Mayweather failed to disclose the payments they got for promoting Centra Tech’s ICO (initial coin offering). Both men have agreed to a settlement with the SEC. DJ Khaled who’s real name is Khaled Khaled, and world heavy weight boxer Floyd Mayweather were charged by the United States Securities and Exchange Commission for failure to disclose the settlement or payment they received for promoting Centra Tech’s initial coin offerings.
A post on Mayweather’s IG account predicted that he would make large amounts of money from another ICO. Another post on Twitter by the boxer said:
“I am now Floyd Crypto Mayweather henceforth.” Both men touted the ICOs to their millions of fans on social media without disclosing the payments they received.
SEC: Khaled was Paid $50,000, and Mayweather was Paid $100,000 by Centra Tech Inc
The SEC charges stem from a number of promotional posts by both men regarding the new digital asset launched by Centra Tech Inc. According to the report, after agreeing to promote their ICO Mayweather didn’t disclose the $100,000 payment he got for his role. While Khaled also failed to disclose the $50,000 payment he received for his part in the debacle, the Securities and Exchange Commission revealed.
Despite the new language, it is no surprise that the SEC has chosen to warn investors that it views most of the initial coin offerings as investments all governed by already existing securities laws.
Should This be Regarded as the Next Big Financial Scandal?
The SEC has continued to warn famous cryptocurrency proponents regarding the regulatory rules. According to the financial commission, these rules need disclosure of any form of payment received in exchange for promotional activities or publicity. According to the SEC, Mayweather received $300,000 for his role in the promotion of three separate ICOs including the Centra Tech Inc issue. We can recall that Centra Tech was accused of fraud by the SEC this April.
Khaled and Mayweather Will Settle The Charges With the SEC by Paying Thousands of Dollars
The SEC has revealed that both Mayweather and Khaled have agreed to pay penalties, disgorgement, and interest, without having to “admit or deny” the findings of the country’s apex financial regulatory commission. Khaled has paid the $50,000 he received back, in addition to that he also paid a $100,000 penalty as well as $2,725 in interest rates. The hip-hop star also came into an agreement with the SEC that he will be banned from promoting any securities for the next two years.
This case is similar to the SEC’s first cases that involved touting violations regarding initial coin offerings. The representative of Khaled and Mayweather have been reached for comments regarding the issue.
Steven Peikin, the SEC’s Enforcement Division Co-Director said the case was a reminder that ICO investors should “question any investment advice posted on the social media. They shouldn’t make decisions based on endorsements made by celebrities. According to Peikin:
“Social media influencers are usually paid promoters and not investment professionals. The securities they are touting, whether they are issued on the blockchain or with traditional certificates, could be fraudulent.”