Professional boxer Floyd Mayweather and music producer DJ Khaled have settled U.S. Securities and Exchange Commission charges alleging they failed to disclose payments received for promoting investments in initial coin offerings, the first SEC cases to charge touting violations involving ICOs.
According to the SEC, Mayweather didn’t disclose a $100,000 payment from Centra Tech Inc., while Khaled failed to disclose a $50,000 payment. Shortly before Centra’s ICO, Mayweather posted on his Twitter, “Get yours before they sell out, I got mine…”
The SEC in April charged two co-founders of Centra Tech with violating anti-fraud and registration provisions of federal securities laws in connection with an ICO last year. Centra Tech was said to have raised more than $32 million from investors in the offering.
The SEC also alleged that Mayweather didn’t disclose that he was paid $200,000 to promote two other ICOs. In another post on Twitter, the boxer wrote: “You can call me Floyd Crypto Mayweather from now on,” according to the Commission.
Both he and Khaled agreed to pay disgorgement, penalties and interest (Mayweather $300,000 in disgorgement, $300,000 penalty and $14,775 in prejudgment interest; Khaled $50,000 in disgorgement, $100,000 penalty and $2,725 in prejudgment interest). Mayweather also agreed not to promote any securities for three years, and Khaled for two years. Neither man admitted the SEC’s findings.
The SEC noted the alleged promotions came after the commission issued its 2017 DAO Report, which warned that coins sold in ICOs may be securities subject to federal securities laws. That same year, the SEC warned that celebrity endorsements of ICOs could be illegal if it were not disclosed that the individuals were compensated.