- Floyd Mayweather and DJ Khaled have been fined by the US securities regulator for the unlawful promotion of ICOs.
- The pair promoted a number of ICOs last year, without disclosing that they were paid for their services.
As crypto-mania launched into overdrive around the middle of last year, Floyd Mayweather and DJ Khaled took to social media and spruiked a number of initial coin offerings (ICOs).
Now, the pair have been hit with around $US750,000 in penalties, after settling charges with US Securities & Exchange Commission over unlawful ICO promotion.
Mayweather will pay back a $US300,000 disgorgement fee, cough up for a $US300,000 fine along with about $US15,000 in interest payments.
Khaled’s disgorgement fee totalled $50,000 and he will also pay a $100,000 fine (a disgorgement fee is the enforced reimbursment of payments obtained illegally).
Mayweather will be banned from the promotion of any securities — “digital or otherwise” — while Khaled agreed to a two-year ban.
The SEC specifically cited an ICO for Centra Tech Inc, which the pair touted on social media but failed to disclose that they were paid to do so. Mayweather was paid $US100,000 while Khaled received $US50,000.
Mayweather also promoted other ICOs including one for Stox.com, which allegedly raised $US33 million in August last year.
A quick check of the Stox (STX) token on coinmarketcap.com shows it’s now trading at $US0.014849, resulting in an implied market valuation of $US750,000.
Both celebrities agreed to pay the fines “without admitting or denying the findings,” the SEC said.
About 12 months after Mayweather and Khaled’s indiscretions, in August this year, former Australian cricket captain promoted an ICO on Twitter for an entity called Global Tech.
Two months later in October, Global Tech agreed to shut down the ICO in consultation with the corporate regulator, ASIC.
The penalties administered to Mayweather and Khaled were in line with the ICO rules established by the SEC last year, in which it defined most ICOs as securities which were therefore subject to securities law.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” the SEC’s Stephen Peikin said.
The SEC said its investigation into the unlawful promotion of ICO is ongoing.
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