LOS ANGELES (CBSLA) — Former boxing champ Floyd Mayweather Jr. and music producer DJ Khaled have settled with the Securities and Exchange Commission (SEC) for failing to disclose payments they received for promoting investments in cryptocurrency.
According to the SEC, investigators found Mayweather failed to disclose promotional payments from three Initial Coin Offering (ICO) issuers, including $100,000 from Centra Tech Inc., and that Khaled - whose real name is Khaled Khaled - failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media accounts as a "Game changer."
Mayweather's promotions included a message to his Twitter followers that Centra's ICO "starts in a few hours. Get yours before they sell out, I got mine…", regulators said.
A post on Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: "You can call me Floyd Crypto Mayweather from now on." The SEC also found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.
Without admitting or denying the findings, Mayweather agreed to pay more than $600,000 and Khaled agreed to pay more than $150,000. 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. Mayweather also agreed to continue to cooperate with the investigation, according to the SEC.
"These cases highlight the importance of full disclosure to investors," said SEC Enforcement Division Co-Director Stephanie Avakian. "With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."
Regulators say the cases are the SEC's first to charge touting violations involving ICOs.
In April, Centra Tech co-founders Raymond Trapani, Sohrab Sharma and Robert Farkas were arrested and charged with securities and wire fraud of more than $25 million associated with the company's ICO.
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