The U.S. Security and Exchange Commission has settled charges against DJ Khaled (given name: Khaled Mohamed Khaled) and boxer Floyd Mayweather Jr. for their alleged roles in cryptocurrency fraud, the SEC announced on Thursday.
According to the SEC, Khaled promoted Centra Tech Inc. on social media as a “game changer” and was paid $50,000 by the company without disclosing the payment to potential investors. Meanwhile, the SEC said Mayweather failed to disclose promotional payments from three cryptocurrency issuers, including $100,000 from Centra Tech and $200,000 from the others.
In April, the SEC filed a civil action suit against Centra’s founders, claiming that the ICO was fraudulent, with the U.S. Attorney’s Office for the Southern District of New York also filing criminal charges.
Khaled and Mayweather have agreed to pay big fines – more than $150,000 for Khaled and more than $600,000 from Mayweather – in the settlement, though they are doing so “without admitting or denying the findings,” according to the SEC’s statement. As part of the settlement, Mayweather agreed to not promote any securities for three years, while Khaled made a similar arrangement that will span two years.
“Investors should be skeptical of investment advice posted to social media platforms and should not make decisions based on celebrity endorsements,” Enforcement Division Co-Director Steven Peikin said in a statement. “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.”