Floyd Mayweather and DJ Khaled have settled cases brought by the Securities and Exchange Commission alleging that they failed to disclose payments they had received to promote initial cryptocurrency coin offerings (ICOs) on social media.
Mayweather and Khaled agreed to pay multiple fines that have a combined total of more than $750,000. Which won't exactly break the bank for either the former world's highest-paid athlete or the superstar music producer, but it's still plenty steep.
A press release from the SEC describes their transgressions and punishments.
The SEC's orders found that Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech Inc., and that Khaled failed to disclose a $50,000 payment from Centra Tech, which he touted on his social media accounts as a "Game changer."
Mayweather's promotions included a message to his Twitter followers that Centra's ICO "starts in a few hours. Get yours before they sell out, I got mine…"
A post on Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: "You can call me Floyd Crypto Mayweather from now on." The SEC order found that Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.
Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.
Centra has been charged separately by the SEC for an allegedly fraudulent initial coin offering. Watch Khaled promote the crypto company's wallet app below.
As part of their settlement, Mayweather and Khaled agreed not to promote any securities, including digital ones, for three and two years, respectively.
The case is a something of landmark in the world of cryptocurrency, as it's the first time the SEC has brought charges against individuals for promoting ICOs.
"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," added 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."