Securities and Exchange Commission has charged professional boxer and a rapper. Reports recently revealed that former welterweight champion Floyd Mayweather Jr. and a music producer DJ Khaled has allegedly caught by SEC while failing to reveal the payment received to promote ICOs.
Press release published on November 29 state that boxer Mayweather received the payment of $300,000 to promote three ICOs including Centra Tech. Following it, coingape reported that one of its ICO, Centra Tech was charged on fraud case by the federal prosecutors in Manhattan earlier this year. In contrast, Music director, DJ Khaled accused of failing to disclose a payment of $50,000 from the same firm, Centra Tech.
Both, music producer and boxer found promoting the fraudulent crypto project across their social media pages. They call it “game changer” to encourage social enthusiasts to get involved with the ICO. In the year 2017, ICO promotion via celebrities was on hype, investigating which, SEC warned tokens/coins distributed during ICOs will fall under securities Act.
Fines Over Promoting ICO
However, if the payment received by Mayweather and Khaled would have been disclosed, the case would be different. But by failing to reveal, SEC has brought charges against them.
“With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.” Said by Stephanie Avakian, co-director of the SEC’s enforcement division.
While questioning about the payement and ICO promtion, neither the attorney of Mr. Khaled nor Mr. Mayweather was open to the discussion. As a result, both settled civil charges from SEC on Thursday. Specifically, they couldn’t deny SEC’s claim and agreed to pay $614,775 (Mayweather) and $152,725 (Khaled) to SEC prosecutors. Along with such huge fine, they have also been warned not to promote any crypto project until three years for Mayweather and two years for Khaled.
This initiative by SEC indicates regulator’s concern to protect investors and the funds of individuals. However, it also acts as a warning to celebrities that may involve in the promotion of any digital securities.
Steven Peikin, the co-director of the SEC’s Enforcement Division said in a note that;
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,”
He also explains that the social media posts on investment shouldn’t be considered as the advice. It may often come under advertisement within respective social network. He advised to have due diligence stating;
“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,”
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Tabassum is a full-time content writer at Coingape. Her passion lies in writing and delivering apt information to users. Currently, she does not hold any form of cryptocurrencies. Follow her on Twitter at @Tabassumnaiz and reach out to her at Tabassum[at]coingape.com