The U.S. Securities and Exchange Commission (SEC) has settled charges with professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled – better known as DJ Khaled – for not disclosing that they were paid to promote initial coin offerings (ICOs).
Announced Thursday, the regulator said that Mayweather received $100,000 from Centra Tech, as well as another $200,000 from Stox and Hubii Network. Khaled was paid $50,000 to promote Centra Tech, according to the agency.
The co-founders of Centra Tech were indicted by a grand jury earlier this year on charges of fraud and conspiracy.
In a statement Thursday, SEC Enforcement Division co-director Stephanie Avakian said that “with no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Neither celebrity admitted to or denied the charges in their settlements. Mayweather will pay $300,000 in disgorgement, $300,000 in penalties and $14,775 in prejudgment interest. Khaled will pay $50,000 in disgorgement, $100,000 in penalties and $2,725 in prejudgment interest.
Further, the two are banned from promoting “any securities, digital or otherwise,” for the next few years; Mayweather has agreed to a three-year ban, while Khaled’s ban will last for a period of two years.
The SEC added that Mayweather will continue to cooperate with its investigation, which is ongoing.
The move comes more than a year after the agency first warned celebrities that it may be against the law to promote investment products if they “do not disclose the nature, source and amount of compensation paid … in exchange for the endorsement.”
SEC emblem image via Shutterstock