Mayweather, DJ Khaled Charged With Unlawfully Touting ICOs

Elon Musk is no longer the most talked about source of scrutiny from the SEC. Professional boxer Floyd Mayweather, Jr. and music producer DJ Khaled are now in the spotlight.

What Happened

The Securities and Exchange Commission Thursday afternoon announced charges against both Mayweather and Khaled. These charges have been given to the celebrities after failing to disclose received payments for promotional investments in initial coin offerings, according to the press release.

The SEC has determined Mayweather failed to disclose funding such as $100,000 from Centra Tech Inc., while Khaled neglected to announce a $50,000 payment. Both instances occurred after the SEC announced that coins sold in this capacity must comply with federal securities laws.

These are the SEC’s first cases of these particular violations.

Why It’s Important

Both Mayweather and Khaled were guilty of posting of the large money on platforms like Twitter Inc. (NYSE: TWTR) and Facebook Inc (NASDAQ: FB)'s Instagram, essentially promoting the transactions.

"These cases highlight the importance of full disclosure to investors," said 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."

"Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements," said Enforcement Division Co-Director Steven Peikin. "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."

What’s Next

Both Mayweather and Khaled will pay disgorgement, penalties and interest, in addition to refraining from any promotion of securities for three years.

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