In line with its decision to sanitize the cryptocurrency industry from fraudulent activities by crypto-based businesses, the U.S. Securities and Exchange Commission (SEC) has once again fined two celebrities, Floyd Mayweather Jr. a professional boxer and music mogul DJ Khaled for not disclosing that they were paid by crypto-based businesses to promote their initial coin offerings (ICOs).
Announcing its decision on Thursday, SEC made it known that professional boxer, Floyd Mayweather Jr. accepted $100,000 from Centra Tech as well as another undisclosed $200,000 from Stox and Hubii Network. DJ Khaled was also reported to have collected $50,000 from Centra Tech as payment for promoting their ICO.
It would be recalled that the co-founders of the company, Centra Tech where indicted by a grand jury earlier this year for charges bothering on fraud and conspiracy.
Commenting on the agencies decision to fine the two celebrities, SEC Enforcement Division co-director Stephanie Avakian noted that “with no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
More so, none of the celebrities indicted in this case have either admitted to or denied the charges in their settlements. To this end, Floyd Mayweather will now pay $300,000 in disgorgement, $300,000 in penalties and $14,775 in prejudgment interest. On the flip side, DJ Khaled is also expected to pay $50,000 in disgorgement, $100,000 in penalties and $2,725 in prejudgment interest.
Also, the SEC has now banned both celebrities from promoting “any securities, digital or otherwise,” for the next few years; and while Mayweather has accepted a three-year ban, Khaled’s ban is expected to last for two years.
And although investigations are still ongoing, the SEC stated that Mayweather would continue to cooperate with the agency.
This new fine is coming a year after the regulator warned celebrities against promoting investments products they “do not disclose the nature, source and amount of compensation paid … in exchange for the endorsement.”