Undefeated (50-0) American professional boxer, Floyd Mayweather Jr, aka “Pretty Boy Money”, and American DJ, record producer, and media personality, DJ Khaled , have been ordered to pay thousands of dollars – in order to settle charges for violating US financial laws.
The US Securities and Exchange Commission (SEC) announced the settlement on the matter on Thursday (November 29th).
The US federal regulator stated that the two men had failed to disclose payments – which they received for promoting questionable cryptocurrency investments to their millions of followers on social media.
Although DJ Khaled and Mayweather have not commented on the charges leveled against them, they have both agreed to pay over $750,000 (combined) in penalties.
Promoting Scam ICOs
Notably, there have now been several celebrities who have been caught promoting scams related to initial coin offerings (ICOs). As CryptoCoreMedia reported in February this year, Steven Seagal, the world-famous Hollywood actor and martial arts expert, had been promoting a controversial cryptocurrency called Bitcoiin.
However, Seagal mysteriously parted ways with the project when its ICO completed in March.
Violating US Securities Laws
Getting back to the recent ICO scam involving Mayweather and DJ Khaled, the SEC has issued several warnings to would-be investors that it considers many of the ICOs to be investments that are subject to existing US securities laws.
In the case of the two celebrities, they did not disclose to their followers that they were being paid money to promote a crypto-related product. Mayweather reportedly received $300,000 to promote several crypto projects – including the Centra Tech project , a Miami based firm that was charged with fraud in April.
One of Pretty Boy’s promotional messages to his Twitter followers said:
Centra’s ICO “starts in a few hours. Get yours before they sell out, I got mine….”
Meanwhile, DJ Khaled had reportedly been paid $50,000 by the Centra Tech management team.
Moreover, a post on Mayweather’s Instagram account claimed he would be making large sums of money through another ICO and another post to Twitter stated:
“You can call me Floyd Crypto Mayweather from now on.”
The two men claimed that the projects were great investments as they tweeted promotional messages to millions of their social media followers. However, neither Mayweather nor Khaled disclosed that they were paid handsomely to promote the crypto-related products.
One of Khaled’s messages reads:
“This is a game changer here. Get your CTR tokens now!”
The SEC has reported that Khaled has agreed to repay the $50,000 he was paid to endorse the Centra Tech project, and he will also be paying a $100,000 fine, in addition to interest.
Mr Mayweather will be repaying the $300,000 he got for his endorsements, along with a $300,000 fine, plus interest.
Steven Peikin, the SEC Enforcement Division co-director stated that the cases should serve as a reminder to investors that they should “be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements”.
Peikin added: “Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”