DJ Khaled is one of two high-profile names to have been fined by the Securities and Exchange Commission (SEC) for violating US financial rules by improperly promoting cryptocurrency.
The super-producer and DJ reached a settlement with the SEC in a deal that was announced yesterday (November 30), with the financial regulator also penalising boxer Floyd Mayweather Jr.
According to the SEC, both Khaled and Mayweather Jr. “failed to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs).” The statement notes that this is the first time that the SEC has made cases to charge touting violations involving ICOs in the US.
Khaled failed to disclose a $50,000 payment from Centra Tech, which he had touted on social media as being a “game changer.”
Both Mayweather and Khaled neither admitted nor denied the claims but they each agreed to “pay disgorgement, penalties and interest”. Khaled agreed to pay $50,000 in disgorgement, a $100,000 penalty, and $2,725 in prejudgment interest, with his combined fines totalling $152,725 (£120,000).
“In addition, Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years,” the SEC’s statement added.
Enforcement Division Co-Director Stephanie Avakian said of the verdict: “These cases highlight the importance of full disclosure to investors. With no disclosure about the payments, Mayweather and Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”