The SEC means business! It seems like the SEC was serious when they said that they’d pursue improper securities violations – DJ Khaled and Floyd Mayweather Jr. have both been charged by the SEC with promoting investments in Initial Cryptocurrency Coin (ICO) offerings without revealing that they’d been paid. Does it shock you, that the SEC has charged DJ Khaled and Floyd Mayweather Jr.? Or were you expecting this?
The SEC has said that cryptocurrency coins sold in ICOs may be considered securities and subject to federal securities laws. The implication is huge – we’ve covered how Bitcoin and Ethereum are not considered securities by the SEC, but literally every other cryptocurrency is considered, by the SEC, a security.
Both Khaled and Mayweather settled with the SEC and agreed not to promote any securities, even digital ones, for 2 and 3 years, respectively. They also agreed to pay back the money they’d received to the SEC and pay penalties.
The SEC had issue with the fact that both Mayweather and Khaled failed to disclose payments from ICO issuers, one of whom was Centra Tech, who paid out both individuals.
Centra has also been charged by the SEC for fraud. Centra has not responded to media requests.
Both Mayweather and Khaled promoted Centra’s ICO on their social media accounts. Khaled called Centra a “game changer” while Mayweather encouraged his followers to invest in the ICO since he had as well.
Mayweather commented on another ICO saying that he was going to make a lot of money. “You can call me Floyd Crypto Mayweather from now on,” he tweeted.
The SEC has made it clear that ICOs can be fraudulent, and encourages would-be investors to be wary or avoid ICOs that are endorsed by celebrities. Commenting on both Mayweather and Khaled, Steven Peikin, the SEC’s enforcement division co-director said: “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsement… 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.”
This is the first time the SEC has brought charges against individuals for promoting ICOs. This will probably not be the last.
We had gone over how the SEC is wary to approve a Bitcoin ETF. This is one of the biggest reasons why – the ability to commit fraud is immense. The SEC wants to make sure that the market and ecosystem has adequate protections for investors.
What do you think? Do you think the SEC is right to charge Khaled and Mayweather? We know big adoption is coming by financial institutions and banks – we just don’t know when. Let us know what you think on our Facebook page!