Yahoo Sports Floyd Mayweather settles for shilling alleged $32M cryptocurrency scam without disclosing he was paid to do so
In 2017, boxer Floyd Mayweather and music producer DJ Khaled used their social media platforms to promote cryptocurrency to their followers.
Mayweather told his followers to “Get yours before they sell out” while Khaled touted a “game changer” when promoting an initial coin offering (ICO) from Centra Tech.
Centra's (CTR) ICO starts in a few hours. Get yours before they sell out, I got mine https://t.co/nSiCaZ274l pic.twitter.com/dB6wV0EROJ
— Floyd Mayweather (@FloydMayweather) September 18, 2017
Cryptocurrency founders facing serious fraud charges
In May, the Securities and Exchange Commission arrested three founders of Centra Tech — Robert Farkas, Sam Sharma and Raymond Trapani — and charged them with multiple counts of fraud for allegedly duping investors while raising $32 million in the ICO.
The company stands accused of lying to investors about having relationships with Visa and Mastercard that it didn’t and making up non-existent CEO Michael Edwards among other charges of fraud.
The U.S. government seized more than $60 million in digital currency. The arrested founders face up to 20 years in prison.
From the United States Attorney’s Office:
As alleged, the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO. Whether traditional or cutting-edge, investment vehicles can’t legally be peddled with falsehoods and lies.
Mayweather, Khaled facing civil suit, settle with SEC
In October, TMZ reported that investors had filed a class-action suit against Mayweather and Khaled for their role in promoting the alleged fraudulent scheme, seeking to recoup their losses.
On Thursday, the SEC announced that it had reached a settlement with Mayweather and Khaled on charges that they failed to disclose that they had been paid by Centra Tech while promoting the cryptocurrency.
Both pay six-figure penalties
Without admitting or denying guilt, Mayweather agreed to pay the $300,000 he received to promote Centra Tech and other ICOs in addition to a $300,000 penalty and $14,775 in interest. Khaled paid the $50,000 fee he received in addition to a $100,000 penalty and $2,725 in interest.
“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.”
Neither Mayweather nor Khaled are included in the fraud charges facing Centra Tech’s founders.
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