Floyd Mayweather, DJ Khaled charged with illegally promoting crypto ICOs

The U.S. Securities and Exchange Commission on Thursday said it has reached settlements with boxer Floyd Mayweather and music producer DJ Khaled over their failure to disclose payments they received for promoting Initial Coin Offerings (ICOs) involving cryptocurrency firms.

Mayweather was charged with failing to disclose a $100,000 payment from Centra Tech, a cryptocurrency firm whose three co-founders were indicted last May on fraud charges, as well as $200,000 to promote two other ICOs. Khaled, whose real name is Khaled Khaled, was charged over a $50,000 payment from Centra Tech.

As part of the settlement, Mayweather will pay more than $600,000 in fines, including $300,000 in disgorgement, a $300,000 penalty and $14,775 in interest. Khaled will pay $50,000 in disgorgement, a $100,000 fine and $2,725 in interest. Neither party will admit or deny wrongdoing in relation to the charges.

"These cases highlight the importance of full disclosure to investors," said SEC 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."

Both Mayweather and Khaled used their social media accounts to tout Centra Tech’s ICO without noting in their posts that they were paid endorsers. Khaled referred to Centra’s ICO as a “game changer.” In a Twitter post touting another ICO, Mayweather told his millions of followers that they could call him “Floyd Crypto Mayweather from now on.”

Centra Tech’s co-founders, Raymond Trapani, Robert Farkas and Sohrab Sharma, were indicted on conspiracy, securities fraud and wires fraud amid allegations that they fabricated business partnerships with major companies such as Visa to secure investments from the public.