Miami music producer DJ Khaled will pay a total of $152,725 and boxing champion Floyd Mayweather will pay a total $614,775 to settle a Securities and Exchange Commission case against each for improper investment promotion, the SEC announced Thursday afternoon.
These charges came after the Securities Exchange Commission issued the 2017 DAO report, which warned that "coins sold in ICOs may be securities", and that those who offer to sell securities in the USA must comply with federal securities laws.
Both parties promoted Centra Tech on their social media accounts leading up to the ICO; Mayweather told his Twitter followers that it "starts in a few hours". He boasted on Twitter that "You can call me Floyd Crypto Mayweather from now on".More news: Nasdaq to Launch Bitcoin Futures Q1 2019
The SEC says these are the first such cases involving ICOs.
In Mayweather's case, the SEC found that he did not disclose promotional payments he received from three ICO issuers, including $100,000 from crypto startup Centra Tech Inc.
The SEC added that Mayweather will continue to cooperate with its investigation, which is ongoing. It seems that neither Mayweather or Khaled got that message.
"Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements", said SEC enforcement division co-director Steven Peikin in the aforementioned press release.More news: Trump Rallies in MS for Embattled Sen. Cindy Hyde-Smith
Others in the industry feel that these celebrities should be held accountable, and suggest that these endorsements may be a reason why cryptocurrency faces public scrutiny and skepticism. Mayweather will give up $300,000 in disgorgement, another 300 grand as a penalty, and a bit extra for interest. This is a Game changer here. Khaled will pay a $100,000 penalty, $50,000 in disgorgement (money paid back after being received via illegal or unethical business actions) and $2,725 in prejudgment interest.
Without admitting or denying what the SEC charged, the two men agreed to the settlement terms.
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