They didn’t reveal that they had been paid for promoting the investments
Music producer DJ Khaled and boxer Floyd Mayweather Jr were charged by the US Securities and Exchange Commission Thursday with promoting investments in initial cryptocurrency coin offerings without revealing that they’d been paid.
The SEC has said that cryptocurrency coins sold in initial coin offerings may be considered securities and subject to federal securities laws, reported CNN.
Both Khaled and Mayweather settled with the SEC and agreed not to promote any securities, even digital ones, for two years and three years respectively. They also agreed to give back the money they’d received to the SEC and pay penalties with interest.
Mayweather failed to disclose that he’d received $300,000 from three different ICO issuers, including $100,000 from Centra Tech. Khaled failed to disclose a payment of $50,000 from the same company.
“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,” said Steven Peikin, the SEC’s enforcement division co-director.
This is the first time the SEC has brought charges against individuals for promoting ICOs and the investigation is ongoing.