DJ Khaled and Floyd Mayweather will pay more than $767,000 to settle SEC case

DJ Khaled and Poo Bear perform at Marlins Park before the start of the 2018 Opening Day baseball game between the Miami Marlins and the Chicago Cubs.
DJ Khaled and Poo Bear perform at Marlins Park before the start of the 2018 Opening Day baseball game between the Miami Marlins and the Chicago Cubs.

Miami music producer DJ Khaled will pay a total of $152,725 and boxing champion Floyd Mayweather will pay a total $614,775 to settle a Securities and Exchange Commission case against each for improper investment promotion, the SEC announced Thursday afternoon.

Each talked up Initial Coin Offerings on social media during 2017 without letting his considerable audience know he was getting promotional payments from the company he was touting.

The company at the center of the issue is Centra Tech, incorporated in Delaware on July 27, 2017, according to documents on the State of Florida’s corporate registry. Centra’s ICO was sold as raising capital for a debit card system that would allow those with “cryptocurrencies” to spend money via a Centra Card backed by Visa or Mastercard.

On Sept. 24, 2017, Khaled posted to his Instagram (12.9 million followers) and Twitter (3.9 million followers) accounts a photo of him holding a Centra Card with, “I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens! Use your bitcoins, ethereum, and more cryptocurrencies in real time across the globe. This is a Game changer here. Get your CTR tokens now!”

Not included in Khaled’s message was the $50,000 that Centra Tech paid him for the social media love.

During the 2017 summer, Mayweather’s following numbered 21 million on Instagram, 13.4 million on Facebook and 7.8 million on Twitter. The settlement says he got $300,000 from three companies issuing ICOs, including $100,000 from Centra Tech.

For that money, Centra got Mayweather tweeting on Sept. 18, 2017, “Centra’s ICO starts in a few hours. Get yours before they sell out, I got mine…”

Centra also got a Sept. 14, 2017, Instagram and Facebook post of Mayweather in a shoe store holding a Centra Card with “Spending bitcoins ethereum and other types of cryptocurrency in Beverly Hills with my Titanium Centra Card. Join Centra’s ICO on Sept. 19th.”

Centra Tech’s facing a civil suit from the SEC that alleges its ICO was a fraud and a federal criminal case filed by the U.S. Attorney’s Office for the Southern District of New York.

Without admitting or denying what the SEC charged, the two men agreed to the settlement terms. Khaled will pay a $100,000 penalty, $50,000 in disgorgement (money paid back after being received via illegal or unethical business actions) and $2,725 in prejudgment interest. Mayweather will pay a $300,000 penalty, $300,000 in disgorgement and $14,775 in prejudgment interest.

Mayweather can’t promote any securities for three years and Khaled can’t do so for two years.

The SEC says these are the first such cases involving ICOs.

DJ Khaled came to the rescue Thursday when he helped his friend, Ayo Juan, who fell off a watercraft in Aventura, according to Snapchat.