Floyd Mayweather and DJ Khaled fined over cryptocurrency promotion


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The U.S. Securities and Exchange Commission on Thursday said it has reached settlements with boxer Floyd Mayweather and music producer DJ Khaled over their failure to disclose payments they received for promoting Initial Coin Offerings (ICOs) involving cryptocurrency firms.

These are the SEC's first cases of these particular violations. The SEC noted that using celebrity endorsers was a crucial part of the ICO issuers' promotional strategy.

The SEC said Khaled called Centra Tech a "game-changer", while Mayweather said he wanted to rename himself "Floyd "Crypto" Mayweather" (his nickname is "Money") and told his followers that Centra Tech's "initial coin offering", a process by which new, Bitcoin-style cryptocurrencies sell their tokens, "starts in a few hours".

In this case, the SEC said Mr Mayweather received $300,000 to promote three separate offerings, including one by Centra Tech, a Miami company that the SEC accused of fraud in April.

Centra Tech's co-founders, Raymond Trapani, Robert Farkas and Sohrab Sharma, were indicted on conspiracy, securities fraud and wires fraud amid allegations that they fabricated business partnerships with major companies such as Visa to secure investments from the public.

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It appears both Floyd Mayweather & DJ Khaled have settled their SEC lawsuit in their cryptocurrency scandal.

In an August 2017 tweet, Mayweather suggested that he would make a windfall on an ICO. He boasted on Twitter that "You can call me Floyd Crypto Mayweather from now on". In addition, Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years. The SEC also found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.

Khaled agreed to pay a $100,000 penalty, $50,000 in disgorgement, and $2,725 in prejudgment interest.

Khaled was also warned separately that he was not properly disclosing other instances in which he was paid to promote products on social media, including in posts where he bragged about his love for Cîroc vodka.

Floyd and DJ Khaled were charged by the SEC, because they failed to disclose to investors, or their fans, that they were paid to endorse the "CTR" token.

"These cases highlight the importance of full disclosure to investors", said Stephanie Avakia, co-director of the SEC's enforcement division.