Famous Boxer and DJ Fined for Cryptocurrency Promotion
A famous American DJ and record producer, and a professional boxer and boxing promoter have just been handed down combined fines of over $750,000 by the Securities and Exchange Commission for unlawfully promoting cryptocurrencies.
Although DJ Khaled and Floyd Mayweather have neither admitted nor denied SEC’s charges, they have agreed to pay the financial penalties of $767,500 that are due.
According to the Securities and Exchange Commission, which regulates the securities markets in the US, the unlikely duo failed to disclose payments worth $150,000 from three ICOs.
The cryptocurrency company, Centra Tech, is said to have given $50,000 to Khaled and a further $100,000 to Mayweather in return for promoting their initial coin offering (ICO). Both the DJ and boxer are said to have used their respective social media accounts to share news of the ICO among their fans and followers.
Reportedly, Floyd Mayweather went so far as to tell his 7.85m followers on Twitter that they should “call me Floyd Crypto Mayweather from now on”, and further endorsed Centra Tech’s ICO by encouraging his fans to “get yours before they sell out – I got mine”.
However, the Securities and Exchange Commission concluded that the American boxing promoter had failed to declare that he received a payment of $200,000 to promote the other two initial coin offerings.
While it’s common for celebrities to be asked by big companies to endorse their products and services due to their huge fan bases, promotion of cryptocurrencies and ICOs (in the US, at least) is legally frowned upon.
In 2017, the Securities and Exchange Commission (SEC) issued a report in which it states that coins which are sold as initial coin offerings may be classed as securities and, therefore, sellers and promoters are required by federal law to declare their financial relationship to the cryptocurrency company.
As well as imposing hefty fines on DJ Khaled and Floyd Mayweather, SEC has banned the DJ from promoting any securities (including ICOs) for two years, and the boxer for three years.
A spokesperson for the Securities and Exchange Commission’s enforcement division says that the pair’s failure to divulge the payments that they received means that their ICO promotions may have come across to the public as “unbiased [opinions], rather than paid endorsements”.
Another representative for the enforcement division (co-director, Steven Peikin) told news reporters that investors “should not make a decision based on celebrity endorsements”, and should also “be sceptical of investment advice posted to social media platforms” as the securities that are being promoted “could be frauds”.
Criminal charges have also been filed against DJ Khaled and Floyd Mayweather by the U. S. Attorney’s Office for the Southern District of New York.
DJ Khaled (real name Khaled Mohamed Khaled) has worked with rap and hip-hop artists including Terror Squad, and also fronted Miami-based urban music radio station, WEDR “99 Jamz”.
Floyd Mayweather (the son of 70s and 80s boxer, Floyd Mayweather Snr.) has won many major world titles during his professional boxing career, including WBC lightweight champion and WBO welterweight champion.
By Laura Kilby.