DJ Khaled Charged for Paid Promotion of Fraudulent Cryptocurrency

Congratulations, you played yourself
DJ Khaled Charged for Paid Promotion of Fraudulent Cryptocurrency
In an extremely rare turn of events, DJ Khaled has now played himself, picking up charges for his involvement in promoting a cryptocurrency company that proved to be fraudulent.

Today, the United States Securities and Exchange Commission (SEC) announced settled charges against both Khaled and boxing star Floyd Mayweather Jr. The pair failed to disclose payments they received for promoting investments in Initial Coin Offerings (ICOs).

The SEC found that Khaled failed to disclose a $50,000 USD payment from Centra Tech Inc., a company that raised $32 million USD with its ICO. Mayweather, meanwhile, did not disclose a payment of $100,000 USD he received from Centra Tech, in addition to another $200,000 USD he was paid to promote two other ICOs.

In a now-deleted Instagram post made last September (archived here), Khaled promoted the Centra Card and Centra Wallet app as "the ultimate winner in Cryptocurrency debit cards," calling it "a game changer."

This past May, the founders of Centra Tech were indicted for wire and securities fraud. The trio of Raymond Trapani, Sohrab Sharma and Robert Farkas were found guilty of attempting to "capitalize on investor interest in the burgeoning cryptocurrency market" by making "false claims about their product and about relationships they had with credible financial institutions, even creating a fictitious Centra Tech CEO."

Both Khaled and Mayweather agreed to pay disgorgement penalties, as well as interest, "without admitting or denying" the SEC's 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.

Additionally, Khaled agreed not to promote any securities, digital or otherwise, for two years, while Mayweather agreed to a similar ban for three years.

"These cases highlight the importance of full disclosure to investors," SEC enforcement division co-director Stephanie Avakian said in a statement. "With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."