The U.S. Securities and Exchange Commission has hit two celebrities with record fines for shilling initial coin offerings (ICOs). Boxer Floyd Mayweather Jr. and music producer DJ Khaled were taken to task for failing to disclose payments they received for touting the projects. The case marks the first time the SEC has taken against celebs for ICO promotion.
The SEC has settled charges with Mayweather and Khaled for ICO violations pertaining to Centra. The agency had previously charged the project’s founders over matters relating to securities fraud. Its latest settlement is the first time the SEC has gone after celebrity promoters of cryptocurrency projects however.
“Without admitting or denying the findings,” explained the press release issued on Nov. 30, “Mayweather and Khaled agreed to pay disgorgement, penalties and interest. 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.”
Paying Penance for the Excess of 2017
In the halcyon days of summer 2017, everyone seemed to be launching ICOs, buying into ICOs, and shilling ICOs. In the cold light of 2018, however, many of those projects have failed, a handful have been prosecuted, and an unknown number are believed to be under investigation for securities violations. Tweets such as “You can call me Floyd Crypto Mayweather from now on” and Khaled’s “Game changer” description of Centra after receiving a $50,000 payment from the project have come back to haunt the pair.
“These cases highlight the importance of full disclosure to investors,” said Stephanie Avakian of the SEC’s Enforcement Division. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.” While ICOs have not died, despite the prolonged bear market and spate of SEC enforcements, the era of celebrity endorsements is effectively now over.
Do you think this action by the SEC will put an end to celebrity ICO endorsements? Let us know in the comments section below.
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