In a historic first, the United States Securities and Exchange Commission (SEC) announced today that it will be settling charges against both celebrity boxer Floyd Mayweather Jr. and music producer DJ Khaled. According to an official statement, both men will be charged with failure to disclose payments that they received in exchange for promoting investments in ICOs (Initial Coin Offerings).
“These are the SEC’s first cases to charge touting violations involving ICOs,” the statement read.
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Two Celebrities Charged With Unlawfully Touting Coin Offerings https://t.co/97waq10WEU
— SEC_News (@SEC_News) November 29, 2018
The statement said that although neither of the men admitted or denied the findings, they both agreed to pay fines in hundreds of thousands of dollars: “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.”
The fines are practically chump change for both defendants; Forbes recently valued Mayweather at $285 million; DJ Khaled is estimated to be worth $20 million. Both men also agreed that they would not promote any securities for several years; Mayweather will continue to cooperate with the ongoing investigation.
SEC Warns that Investors Should Not Trust Social Media for Advice
Enforcement Division Co-Director Steven Peikin said that investors should avoid taking financial advice that has been posted on social media platforms. “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,” he explained.
The SEC has been cranking up its efforts to crack down on illegitimate ICOs since the end of 2017. Yesterday, a US federal judge denied a preliminary injunction filed by the US SEC that would have frozen the assets of Blockvest, a crypto startup. The Commission alleged that the company had violated securities laws.
A number of cryptocurrency companies turned to social media influencers in order to tout their products after platforms like Facebook, Google, and Twitter restricted the ability to place advertisements for ICOs and other cryptocurrency-related products and services.
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