Risk & Compliance

DJ Khaled, Floyd Mayweather Settle Cryptocurrency Charges

The SEC said the case is its first to involve unlawful touting of ICOs.
William SprouseNovember 30, 2018
DJ Khaled, Floyd Mayweather Settle Cryptocurrency Charges

The Securities and Exchange Commission settled with boxer Floyd Mayweather and music producer Khaled Khaled,whose stage name is DJ Khaled,over allegations of failing to disclose payments they received for promoting investments in initial coin offerings.

The settlements are the SEC’s first cases related to touting violations involving ICOs, regulators said in a statement.

Mayweather allegedly failed to disclose promotional payments from three ICO issuers, including $100,000 from Centra Tech. Khaled failed to disclose a $50,000 payment from Centra Tech.

Floyd Mayweather

The founders of Centra Tech, Sohrab Sharma, Raymond Trapani, and Robert Farkas, were indicted this spring on charges of wire fraud and securities fraud for their role in the ICO, which raised $32 million. The SEC filed a parallel civil actions against Centra’s founders in April, alleging the ICO was fraudulent and the company claimed relationships with Visa and MasterCard that did not exist.

“These cases highlight the importance of full disclosure to investors,” said Enforcement Division Co-Director Stephanie Avakian. “With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”

The SEC said the investigation is ongoing and is being run by the New York Regional Office and the Enforcement Division’s Cyber Unit.

Under the settlement, Mayweather agreed to pay $300,000 in disgorgement, a $300,000 penalty, and $14,775 in prejudgment interest. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest.

Mayweather also agreed not to promote any securities for three years and to continue to cooperate with the investigation. Khaled agreed to a two-year ban.

Mayweather and Khaled did not admit or deny the findings.

Khaled called Centra Tech a game changer. Mayweather promoted Centra Tech’s offering on social media, urging followers to get their coins before they sold out.

“You can call me Floyd Crypto Mayweather from now on,” he wrote.

Photo: flickr/Bryan Horowitz, CC BY-SA 2.0