Top Crypto Investment News, Listings, Member Posts, Crypto Investment Daily Indices and more!

5yrs ago Crypto newsbtc Views: 418

Boxing champion Floyd Mayweather Jr. and music producer DJ Khalid have both settled charges with the U.S. Securities and Exchange Commission (SEC) for failing to disclose that they were paid to promote initial coin offering (ICO) projects to the public.

The charges against the two celebrities came about after they both used various social media outlets to promote ICO projects that were in the midst of fundraising rounds.

Mayweather sent out a tweet to his nearly eight million followers regarding an ICO fundraising round being conducted by Centra Tech ICO, who reportedly paid Mayweather $100,000 to tweet about the project.

“Get yours before they sell out, I got mine…” Mayweather wrote.

The same project also paid music producer DJ Khalid to tweet about their ICO, who called the project a “game changer” while being paid an undisclosed $50,000 for the post.

Because the SEC largely classifies ICOs as securities offerings, the undisclosed celebrity endorsements were in violation of securities laws.

Steven Peikin, the SEC enforcement division’s co-director, spoke about the charges against the two celebrities, saying:

“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.”

In a settlement with the SEC, Mayweather paid a total of $614,775 in disgorgement, penalties, and pretrial interest, while also agreeing to not promote any securities products (even disclosed ones) for the next three years.

DJ Khalid also settled the charges, agreeing to pay a total of $152,725 in disgorgement, penalties, and pre-trial interest.

Related Reading: Floyd Mayweather and DJ Khaled Risk Lawsuits over Alleged ICO Scam

SEC Cracking Down on ICO Promotions

Due to the complex nature of ICOs, they have become the perfect venue for groups looking to garner tremendous amounts of money from investors, while offering little more than broad roadmaps and lofty promises, making them highly risky for investors.

Despite this, they can prove to be a highly lucrative and efficient method of fundraising for trustworthy projects, and regulation of the space is critical in order to increase investor-confidence in ICO investments.

Last year, the SEC announced that they would be cracking down on paid celebrity ICO endorsements that are undisclosed, explaining that celebrities or public personas who endorse ICOs must publicly disclose all the information surrounding their relationship to the project.

“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion,” the SEC said in a public statement.

Larry Cermak, the head of analysis at cryptocurrency research website The Block, explained the dangers of celebrity endorsed ICOs, noting that many unsavvy investors take their advice at face value and neglect to do prudent research into the project.

“The main reason why so many inexperienced individuals invest in bad crypto projects is because they listen to advice from a so-called expert. They believe they can take this advice at face value even though it is often fraudulent, intentionally misleading or conflicted.”

As the SEC further enforces ICOs as securities, it is likely that the tokens resulting from these offerings will also be regulated as securities products, which could spell trouble for their investors.

Featured image from Shutterstock.

What Does Floyd Mayweather’s Crypto ICO Settlement with the SEC Imply? on NewsBTC.


Today's Crypto Investment Headlines:

Log In for More
Access Over 250K+ Industry Headlines, Posts and Updates
Not a member yet?

Join AlphaMaven

The Premier Alternative Investment
Research and Due Diligence Platform for Investors

Free Membership for Qualified Investors and Industry Participants
  • Easily Customize Content to Match Your Investment Preferences
  • Breaking News 24/7/365
  • Daily Newsletter & Indices
  • Alternative Investment Listings & LeaderBoards
  • Industry Research, Due Diligence, Videos, Webinars, Events, Press Releases, Market Commentary, Newsletters, Fact Sheets, Presentations, Investment Mandates, Video PitchBooks & More!
  • Company Directory
  • Contact Directory
  • Member Posts & Publications
  • Alpha University Video Series to Expand Investor Knowledge
  • AUM Accelerator Program (designed for investment managers)
  • Over 450K+ Industry Headlines, Posts and Updates
ALL ALPHAMAVEN CONTENT IS FOR INFORMATIONAL PURPOSES ONLY. CONTENT POSTED BY MEMBERS DOES NOT NECESSARILY REFLECT THE OPINION OR BELIEFS OF ALPHAMAVEN AND HAS NOT ALWAYS BEEN INDEPENDENTLY VERIFIED BY ALPHAMAVEN. PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. THIS IS NOT A SOLICITATION FOR INVESTMENT. THE MATERIAL PROVIDED HEREIN IS FOR INFORMATIONAL PURPOSES ONLY. IT DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY INTERESTS OF ANY FUND OR ANY OTHER SECURITIES. ANY SUCH OFFERINGS CAN BE MADE ONLY IN ACCORDANCE WITH THE TERMS AND CONDITIONS SET FORTH IN THE INVESTMENT'S PRIVATE PLACEMENT MEMORANDUM. PRIOR TO INVESTING, INVESTORS ARE STRONGLY URGED TO REVIEW CAREFULLY THE PRIVATE PLACEMENT MEMORANDUM (INCLUDING THE RISK FACTORS DESCRIBED THEREIN), THE LIMITED PARTNERSHIP AGREEMENT AND THE SUBSCRIPTION DOCUMENTS, TO ASK SUCH QUESTIONS OF THE INVESTMENT MANAGER AS THEY DEEM APPROPRIATE, AND TO DISCUSS ANY PROSPECTIVE INVESTMENT IN THE FUND WITH THEIR LEGAL AND TAX ADVISERS IN ORDER TO MAKE AN INDEPENDENT DETERMINATION OF THE SUITABILITY AND CONSEQUENCES OF AN INVESTMENT.