SEC Charges Floyd Mayweather and DJ Khaled for Unlawfully Promoting Fraudulent ICO

In a press release today, professional boxer Floyd Mayweather and music artist DJ Khaled were charged by the SEC for failing to disclose payments received for promoting an allegedly fraudulent ICO. These are the first cases of the SEC penalizing individuals whose only involvement was promoting ICOs.

The celebrity boxer Floyd Mayweather Jr. and renowned music artist Khaled Khaled were both penalized for failing to disclose promotional payments endorsing ICOs.

Neither celebrity disclosed that they received payments for promoting these ICOs.Reactions from the SEC. 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 U.S. must comply with federal securities laws.

"With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."

Within the last few months the SEC has engaged in a flurry of enforcement activity, penalizing two ICOs and the founder of EtherDelta.

The SEC also released a statement about the two cases, indicating that there is a path to compliance even if an ICO originally had not followed regulations.

Centra and its 'CTR' token was an ICO that claimed that it would offer a debit card backed by Visa and Mastercard that would allow users to "Instantly convert hard-to-spend cryptocurrencies into U.S. dollars," according to an SEC press release.

The SEC alleges that the founders of the ICO "Created fictional executives with impressive biographies, posted false or misleading marketing materials to Centra's website, and paid celebrities to tout the ICO on social media."

In April 2018, the SEC filed a civil action against Centra's founders, alleging that the ICO was fraudulent.

This is big news! The SEC first move against influencers, taking down both Mayweather and DJ Kahled, for promoting ICOs and not disclosing getting paid.