The US SEC (Securities And Exchange Commission) settled its charges for retired professional boxer Floyd Mayweather Jr. and DJ Khaled (full name Khaled Khaled), music producer. The reason for this is not disclosing the fact that they were paid in order to promote ICOs (initial coin offerings).
The news was announced on Thursday, with the SEC declaring that Floyd Mayweather received a payment of $100,000 (Centra Tech made the payment) and one of $200,000 (it seems Stox made the payment). Centra Tech was also reported to have paid DJ Khaled an amount of $50,000.
The reason why this is particularly important news is that Centra Tech was actually indicted on charges of conspiracy and fraud. Stephanie Avakian, Us SEC Enforcement Division co-director, declared that:
…with no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.
What is interesting is that both celebrities decided to neither deny or admit settlement charges. However, the verdict is clear: Floyd Mayweather Jr. is going to have to pay $614,775 and DJ Khaled will play $152,725.
In addition to the fines, both celebrities will be banned from promoting securities of any kind in the following years. Mayweather did agree to a 3-year ban and DJ Khaled will have a ban of 2 years. It was also added that the retired boxer is going to cooperate with the ongoing investigations.
This ban appeared over one year after the SEC warned celebrities of the fact that it is possible that it is against the law to actively promote any investment products in the event that stars will “not disclose the nature, source and amount of compensation paid… in exchange for the endorsement.”
The fact that celebrities were fined by the US SEC should not be a surprise. There were numerous celebrities that randomly promoted some ICOs in the past. Unfortunately, many of those ended up being proven to be scams. It is really important that we carefully analyze any endorsement that is made, no matter who is offering the endorsement.
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