Well that certainly backfired.
Professional boxer Floyd Mayweather and music producer DJ Khaled are on the receiving end of substantial fines today. The SEC announced the two would-be cryptocurrency influencers failed to disclose that their support for shady initial coin offerings was in fact bought and paid for. Much like a low-level Instagram influencer shilling some awful skincare product, Mayweather and Khaled allegedly secretly accepted cash to promote various shady ICOs on social media.
“[Centra Tech Inc.’s ICO] starts in a few hours,” Mayweather tweeted. “Get yours before they sell out, I got mine.”
Centra Tech Inc. reportedly paid Mayweather a hefty promotional payment of $100,000. Mayweather, of course, did not disclose this fact in the tweet. He was reportedly also paid $200,000 to promote two other ICOs.
Meanwhile, DJ Khaled reportedly called the Centra ICO a “game changer” on social media. He was allegedly paid $50,000 by the company — a payment that he failed to disclose.
“These cases highlight the importance of full disclosure to investors,” SEC enforcement division co-director Stephanie Avakian explained in a statement. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Notably, the New York Times reported in October of last year that two of the three Centra Tech Inc.’s cofounder were indicted shortly after their company’s ICO for perjury. Then, in April of this year they were charged with fraud.
Mayweather, who neither admitted nor denied the SEC findings, agreed to pay $614,775 in a combination of penalties, disgorgement, and interest. DJ Khaled also didn’t cop to the SEC’s claims, but still agreed to pay $152,725.
Mayweather and Khaled are not the only celebrities to dip their toes in the ICO space. In 2017, Business Insider reported that Paris Hilton tweeted “looking forward to participating in the new [LydianCoin].”
Oh, and Jamie Foxx even got in on the shady fun.
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” said SEC enforcement division co-director Steven Peikin in the aforementioned press release.
If only someone had told that to Mayweather and DJ Khaled.