Floyd Mayweather and DJ Khaled fined by SEC over Fraudulent ICO Promotion

In the fall of 2017, music producer DJ Khaled and boxer Floyd Mayweather became media personalities for Centra Tech blockchain project. The plans announced by the company claimed the development of several...

In the fall of 2017, music producer DJ Khaled and boxer Floyd Mayweather became media personalities for Centra Tech blockchain project.

The plans announced by the company claimed the development of several promising fintech products. The most attractive ones for investors were debit cards supporting both fiat payments backed by Visa and MasterCard systems and cryptocurrency payments in BTC and ETH. The ICO generated $32 million for the company.

In April 2018, SEC accused the company of deceiving its clients: Centra (CTR) token that the ICO organizers offered for investment was not officially registered. Partnerships with Visa and MasterCard also turned out to be nothing but lies. Moreover, some of the team members listed on the company’s website were fake. The three project founders were arrested by law enforcers.

In early 2018, the CTR price was around $4. After SEC had brought its charges, the token almost fully depreciated: the price dropped to $0.01

SEC also brought charges against the stars who advertised Centra Tech. They have to return their illegal profits and pay large fines.

Floyd Mayweather shall return the $300,000 he received as a reward and pay the same amount as a penalty. DJ Khaled is to give back $ 50,000 and pay a $100,000 penalty.

The commission also banned the ex-ambassadors from advertising securities for three years in the Mayweather’s case, and two years for DJ Khaled.

Mayweather and DJ Khaled have not made any public statements, but it is known that Mayweather decided to cooperate in the investigation.

Mayweather and DJ Khaled claimed during the promo that they had already bought Centra’s titanium cards and recommended the project to investors. Floyd Mayweather was previously involved in the promotion of two other ICOs.

Organizers of ICO scams often engage celebrities to promote their projects in order use their authority to deceive unsuspecting investors. Media personalities, for their part, are often ignorant to the products they endorse and participate in promos without careful consideration. For instance, boxer Evander Holyfield advertised the AriseBank scam project, and actor Stephen Seagal endorsed the dubious Bitcoiin2Gen blockchain startup.

Such PR campaigns are aimed at people who do not know much about technology, but want to increase their capitals by investing in a popular technology area.

In order to minimize risks when participating in an ICO, attention should, first and foremost, be paid to things, such as a detailed White Paper, the existence of robust business models, finished products or prototypes. Experienced investors are likely to find any recommendations coming from people who do not have a proven reputation in blockchain, fintech and investment areas suspicious.