The U.S. Securities and Exchange Commission today said it has settled charges with professional boxer Floyd Mayweather Jr. (pictured) and music producer Khaled Khaled for not disclosing they were paid to promote a fraudulent initial coin offering.

The fact that Mayweather (pictured), a former undefeated lightweight world champion boxer, was promoting an ICO is arguably representative of the mania in the space last year and early this year. But unlike some, the SEC failed to see the humor.

The tale starts with two people, Sohrab “Sam” Sharma and Robert Farkas, co-founders of a company called Centra Tech Inc. It was attempting to raise money in an ICO for a cryptocurrency wallet, a linked payment card, an online marketplace to buy goods with digital assets, a cryptocurrency exchange platform and an open-source custom blockchain.

Mayweather, along with Khaled Khaled, aka DJ Khaled, were paid to promote the ICO to the tune of $100,000 and $50,000, respectively.

The SEC closed the ICO down in April, claiming that it was both an unregistered investment and fraudulent. Among various allegations, the SEC said Centra Tech falsely claimed that its offering was backed by Visa and MasterCard even though the company had no relationship with either, and that the ICO promotion material included fictitious company executives and other false and misleading materials.

Under the settlement, Mayweather and Khaled agreed to pay disgorgement, penalties and interest without admitting or denying the findings. 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.

Both Mayweather and Khaled also agreed to a ban in promoting any type of securities for a period of three and two years, respectively.

“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements,” SEC Enforcement Division co-director Steven Peikin said in a statement. “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.”

Photo: Ian McWillams/ Wikimedia Commons