SEC Hits Mayweather, DJ Khaled, For Crypto-Coin Promotion

By on December 12, 2018

December 12, 2018

Early in November the SEC issued a stern warning to investors: Be wary of paid endorsements “from artists, sports figures, or other icons” who may not know what they are talking about. Celebrities, the SEC said, “often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws. Conduct research before making investments, including in ICOs.” (That “Initial Coin Offerings,” now clearly within the purview of the SEC.) Less than a month after the warning, the SEC brought and then settled charges against boxer Floyd Mayweather and music producer Khaled Khaled, known as DJ Khaled. Mayweather, the legendary boxer who held multiple world titles and retired undefeated in 2017, was paid to promote three separate ICOs, in videos and by posting on his Twitter account, where he has nearly eight million followers. (Sample: “You can call me Floyd Crypto Mayweather from now on [. . .] #ICO starts tomorrow! Smart Contracts for sports?!” ) As part of his settlement, Mayweather agreed to refrain from doing any paid endorsements for any security, digital or otherwise, for three years, and to pay a disgorgement of $300K plus interest, and a civil penalty of $300K. Khaled made a similar agreement, with a two-year promise and commensurately smaller disgorgement and fine.

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