According to the SEC, cryptocurrency coins sold in initial coin deals may be considered as securities and subject to federal securities laws.
Both Khaled and Mayweather have agreed with the SEC and have decided not to promote any securities, including digital ones, for two years or three years. They also agreed to return the money they had received to the SEC and pay fines with interest.
Mayweather did not reveal that he had received $ 300,000 from three different ICO issuers, including $ 100,000 from Centra Tech. Khaled did not disclose a $ 50,000 payment from the same company.
Centra was charged separately by the SEC, which claimed that its ICO was fraudulent.
Centra was not immediately available for comment and Khaled promoted Centras ICO in their social media accounts. Khaled called it "Game Changer" while Mayweather encouraged his followers to join the ICO and said he had joined.
Mayweather also commented on another ICO and said that he would make a lot of money.
"You can call me Floyd Crypto Mayweather from now on," he tweeted.
The SEC, which has made clear that ICOs can be fraudulent, encourages potential investors to be cautious or to avoid ICOs approved by celebrities.
"Without disclosure of payments, Mayweather and Khaled's ICO promotions appear to be unpaid advocates"
. "Social media influencers are often paid promoters, not investment specialists, and regardless of whether they're issued through traditional certificates or the blockchain, it could be fraud," said Steven Peikin, co-director of the SEC enforcement division.
This is the first time that the SEC has filed indictment against individuals promoting ICOs, and the investigation is ongoing.