The federal government charged DJ Khaled and Floyd Mayweather for illegally promoting cryptocurrencies without disclosing their compensation.
The Snapchat-superstar DJ and the Instagram-active boxer both forked over their fraudulent funds, but they won’t be the last celebrities to get slapped on the wrist now that the SEC has declared war on influencers.
Crypto has rules now
According to the SEC, “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.”
But Mayweather — who tweeted “You can call me Floyd Crypto Mayweather from now on” before encouraging his followers to buy crypto — failed to disclose payments of $300k to promote 3 separate coins. Khaled failed to disclose a $50k payment from one of those same coins.
The SEC is over the influence
This case is the first time the SEC has charged individuals for promoting ICOs, but it likely won’t be the last.
“Social media influencers are often paid promoters, not investment professionals,” the SEC tweeted. “And the securities they’re touting… could be frauds.”
Now that the SEC has finally defined ICOs as securities, it plans to step up enforcement to prevent influencers, celebrities, and other crypto insiders from committing fraud — which could cause crypto markets to fall even further after a year of historic losses.