Professional boxer Floyd Mayweather Jr. and music producer DJ Khaled have recently settled charges filed by the U.S. Securities and Exchange Commission (SEC) over failing to disclose that both were paid to serve as promoters of Initial Coin Offerings (ICOs).
As detailed in an administrative proceeding published November 29, Mayweather received $200,000 from Stox and Hubii Network, in addition to $100,000 from Centra Tech.
Announced Thursday, the regulator said that Mayweather was paid $100,000 by Centra Tech, as well as another $200,000 by Stox and Hubii Network, while Khaled received $50,000 from Centra Tech.
Earlier this year, a grand jury has indicted the co-founders of Centra Tech on counts of conspiracy and fraud.
As SEC Enforcement Division co-director Stephanie Avakian stated Thursday:
“With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
While both celebrities have neither refuted nor admitted the accusations, they settled the penalties levied by the regulator. As it stands, Mayweather is currently facing $300,000 in penalties, another $300,000 in disgorgement, on top of $14,775 in prejudgment interest, while Khaled will be paying $100,000 in penalties, $2,725 in prejudgment interest, and $50,000 in disgorgement.
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.
Furthermore, the celebrities have also been prohibited by the SEC from endorsing “any securities, digital or otherwise,” for the next several years. While Mayweather has conceded to a three-year moratorium, Khaled has been banned for the next two years.
The move is in line with the SEC’s previously released official statement last year, cautioning celebrities from endorsing questionable investment products that may potentially infringe prevailing laws if they “do not disclose the nature, source and amount of compensation paid … in exchange for the endorsement.”