SEC, the U.S. Securities Exchange Commission has fined ace music producer DJ Khaled and pro boxer Floyd Mayweather Jr. for promoting fraudulent ICOs. The commission has settled charges on the two celebrities for not disclosing their payments for helping ICOs or initial coin offerings.
The regulator came up with an announcement on Thursday saying that Khaled received a payment of $50,000 for promoting Centra Tech while Mayweather was paid $100,000 by Centra Tech and $200,000 by Hubii Network and Stox.
Centra Tech co-founders were prosecuted by a huge jury early this year on charges of conspiracy and fraud.
On Thursday, the co-director of SEC Enforcement Division, Stephanie Avakian stated, “with no displacement regarding payments, Khaled and Mayweather’s ICO promotions might have been considered unbiased instead of being considered paid endorsements.”
The Charges and the Penalties
Neither Mayweather nor Khaled has admitted or denied their involvement and charges. Khaled will be paying $50,000 as disgorgement, $2,725 as prejudgment interest and $100,000 as penalties. On the other hand, Floyd Mayweather will be paying $300,000 as penalties, $14,775 as prejudgment interest and $200,000 as disgorgement.
Further, the two celebrities have been banned from doing promotions for “any digital, securities or otherwise.” This ban is for the next few years. Mayweather has accepted a three-year ban while Khaled’s ban shall last for two years.
As per SEC, Mayweather shall continue to cooperate with the ongoing investigation procedure.
The charges have been levied after over a year when the organization first warned all celebrities that it might be illegal to promote different investment products. The agency also urged the stars about the outcome of such promotions. It had pointed out that compensations for advertisements might be considered illegal if the celebrities did not disclose the amount, nature of the source of benefits received in exchange of endorsement services.