The SEC charged boxing champion Floyd Mayweather and rapper DJ Khaled for not disclosing their payment from Centra Tech ICO, the two settled without admitting or denying the charges. The founders were arrested in April for fraud by the SEC.
The SEC charged boxing champion Floyd Mayweather and rapper DJ Khaled for not disclosing their payment from Centra Tech ICO, the two settled without admitting or denying the charges. The founders were arrested in April for fraud by the SEC
The Centra Tech ICO raised more than $32 million from thousands of investors in 2017 at the height of the cryptocurrency mania that has since seen prices collapse even in the well known coins such as Bitcoin. Centra Tech said it was building a suite of financial products including a cryptocurrency-backed debit card supported by Visa and Mastercard.
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Prior to Centra’s ICO in September 2107 both Mayweather and Khaled promoted the company on their Twitter, Instagram and Facebook pages. Centra told the New York Times that they had paid Mayweather and Khaled for these endorsements, but neither of the celebrities disclosed the payment in their posts. This is the basis of the lawsuit brought by the Securities and Exchange Commission against the two men/
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 pair were sued earlier in the year in a class action lawsuit by investors in addition to the company’s founders, with the aim of recouping their lost money plus damages. The value of the token crashed by over 98%, from about $1 per CTR in February to below $0.02 per token in April. The price collapsed after SEC charged two co-founders of Centra Tech with orchestrating a fraud and criminal authorities arrested them both.
Robert Farkas and Sohrah Sharma are alleged to have “masterminded a fraudulent ICO in which Centra offered and sold unregistered investments through a CTR Token.”
The two are accused of lying about their relationships with Visa and Mastercard, creating fake biographies, and publishing false or misleading marketing materials on Centra’s website. Later in April, the SEC charged a third co-founder, Raymond Trapani, with violating the anti-fraud and registration provisions of U.S. federal securities laws.
The SEC released text messages at the time between Farkas, Trapani and Sharma showing that, in response to a cease-and-desist letter from a bank demanding that Centra remove all references to it from their marketing materials, Sharma said “We gotta get that shit removed everywhere and blame freelancers lol.”
The SEC in the latest suit against Mayweather and Khaled have moved to hold celebrity ICO endorsers to account for supporting them. Given the abundance of said endorsements this could be a nervous time for many celebrities
From The Traders Community News Desk