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SEC scores knockout on former boxing champion Mayweather, Khaled

Posted On: Nov. 30, 2018 10:57 AM CST

SEC scores knockout on former boxing champion Mayweather, Khaled

Former boxing champion Floyd Mayweather Jr. has been defeated by a real heavyweight: the U.S. Securities and Exchange Commission.

Mr. Mayweather was undefeated in his boxing career, but he was apparently no match for the SEC, which charged him and,, bu music producer Khaled Khaled, known professionally as DJ Khaled, for failing to disclose payments they received for promoting investments in initial coin offerings in what the agency said were its first cases to charge touting violations involving ICOs.

The SEC determined that Mr. Mayweather failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech Inc., and that Mr. Khaled failed to disclose a $50,000 payment from Centra Tech. Both celebrities promoted Centra ICOs via social media, with Mr. Khaled touting them as a “game changer.”  

A post on Mr. Mayweather's Instagram account predicted he would make a large amount of money on another ICO and a post to Twitter said: "You can call me Floyd Crypto Mayweather from now on,” according to the SEC, which found that Mr. Mayweather failed to disclose that he was paid $200,000 to promote the other two ICOs.

Without admitting or denying the findings, Mr. Mayweather and Mr. Khaled agreed to pay disgorgement, penalties and interest, according to the SEC. Mr. Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Mr. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest. In addition, Mr. Mayweather agreed not to promote any securities, digital or otherwise for three years while Mr. Khaled agreed to a similar ban for two years. 

The SEC also issued a friendly warning to those who might be inclined to base investment decisions on information disseminated via social media by celebrities.

"Investors should be skeptical of investment advice posted to social media platforms and should not make decisions based on celebrity endorsements," Steven Peikin, enforcement division co-director, said in a statement on Thursday. "Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds."

For both Mr. Mayweather and Mr. Khaled, the settlement means that all they do is lose, lose, lose, no matter what.