The U.S. Securities and Exchange Commission (SEC) has pursued legal actions against professional boxer Floyd Mayweather and professional name-dropper DJ Khaled due to their undisclosed payments for promoting ICOs.
According to a press release on the SEC’s website, the SEC has settled charges with the pair “for failing to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs).” The two both received undisclosed amounts of cash from several ICOs, but the release noted that they were involved with Centra Tech Inc. specifically, which paid Mayweather and Khaled $100,000 and $50,000 respectively.
Khaled publicly referred to Centra’s ICO launch on Twitter as a “game changer,” while Mayweather told his own Twitter followers that Centra’s ICO would start in a few hours and to “get yours before they sell out.”
“You can call me Floyd Crypto Mayweather from now on,” the professional boxer tweeted, after receiving promotional payments that the SEC believes to have totalled $200,000 from another ICO. These transactions came after the SEC publicly announced that it would hold ICO peddlers to the standards of federal securities laws.
Both Mayweather and Khaled elected to settle these cases with the SEC rather than take them to court, “without admitting or denying the findings,” according to the press release. In addition to paying sums in proportion to the respective amounts of money they made from these advertisements, Mayweather had to accept a ban from all securities promotions for three years, and Khaled for two years.
Although the judicial system has recently shown some leniency in treating ICOs unlike securities under SEC standards, some ICOs are still clearly being treated as if they were any other straightforward investment. Clearly, celebrities and other public figures should be wary of publicly endorsing certain companies as get-rich-quick schemes, lest they similarly find themselves at the crosshairs of federal scrutiny.