Last year during the crypto bull market, professional boxer Floyd Mayweather Jr. and music producer Khaled Khaled were getting paid to promote Initial Coin Offerings (ICOs) for new digital tokens.
Yesterday, the U.S. Securities and Exchange Commission (SEC) has announced both celebrities have to return all the money they made from those promotions and pay back additional fines.
According to the U.S. watchdog, Mayweather received $200,000 from Stox and Hubii Network, as well as $100,000 from Centra Tech. Centra Tech also paid $50,000 to Khaled for promotion.
Back in May, a grand jury indicted Centra Tech founders on charges of fraud and conspiracy.
Yesterday, the SEC Enforcement Division co-director Stephanie Avakian declared:
“[…]with no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
None of the two celebrities admitted nor denied the charges in their settlements. Khaled will pay $50,000 in disgorgement, $100,000 in penalties, and $2,725 in prejudgment interest. Mayweather received heftier fines as he will pay $300,000 in disgorgement, $300,000 in penalties and $14,775 in prejudgment interest.
Moreover, the SEC has banned Khaled and Mayweather for promoting “any securities, digital or otherwise” for the next few years. Khaled’s ban has been set to two years, while Mayweather has agreed to refrain from securities promotions for an additional year.
The SEC also mentioned that Mayweather’s investigation is still ongoing and that he will continue to cooperate with the regulator.
Last year, the agency first warned celebrities that promoting investment products may be illegal if they “do not disclose the nature, source and amount of compensation paid … in exchange for the endorsement.”