Last year the SEC issued a warning to celebrities promoting Bitcoin and other cryptocurrency offerings, saying they "must disclose the nature, scope, and amount of compensation received in exchange for the promotion." That warning carried a bit more bite than other advisories about sponsored posts on social media, owing to the involvement of federal securities laws. A failure to heed that warning has cost two high-profile promoters of one particularly scammy initial coin offering (ICO): DJ Khaled and boxer Floyd Mayweather.
Both took money to promote Centra Tech, an ICO that eventually led to fraud charges for several of its masterminds. The SEC found that Mayweather took $100,000 to promote the Centra token, as well as $200,000 to promote two other ICOs, in posts like an Instagram message where he told his millions of followers "You can call me Floyd Crypto Mayweather from now on." DJ Khaled was paid $50,000 to promote Centra Tech -- facts neither mentioned in their social media posts.
While they avoided admitting any wrongdoing, both will have to give up the money they were paid, along with an additional $300,000 penalty for Mayweather to go with a $100,000 fine for DJ Khaled (plus interest). While this year's drop in prices for Bitcoin and other tokens has taken a lot of the steam out of social media posts promising "get rich quick" ICOs, the SEC said its investigation is ongoing, and it's possible these won't be the last social media marketers targeted for their activity. Of course it could be worse -- they could've been promoting another Fyre Festival.