Logo

SEC Charges DJ Khaled With Lying About Cryptocurrency Deal

by / 0 Comments / 1 View / November 29, 2018

DJ Khaled is many things to many people. Musician. Record producer. DJ. Social media maven. Fashion icon. Business mogul.

And now he can add “alleged cryptocurrency fraudster” to his resumé. Today the U.S. Securities and Exchange Commission announced the Miami hip-hop star paid $152,725 in penalties and settlements after it accused him of cryptocurrency-related crimes. The SEC said Khaled (whose real name is Khaled Mohamed Khaled) failed to disclose he was getting paid to promote cryptocurrency “initial coin offerings” for various companies.

The SEC also hit boxer Floyd Mayweather for allegedly committing the same crime. (Mayweather paid $614,775 in penalties and settlements.) Both men allegedly promoted a new Miami-based cryptocurrency company called Centra Tech without disclosing it had, in fact, paid them to talk about the brand on social media.

The SEC said Khaled called Centra Tech a “game-changer,” while Mayweather said he wanted to rename himself “Floyd ‘Crypto’ Mayweather” (his nickname is “Money”) and told his followers that Centra Tech’s “initial coin offering,” a process by which new, Bitcoin-style cryptocurrencies sell their tokens, “starts in a few hours. Get yours before they sell out. I got mine.”

It turns out Centra Tech had paid Khaled $50,000 and Mayweather $200,000. Neither celebrity told his followers about the money. (Neither admitted guilt as part of the SEC settlements.)

Furthermore, Centra Tech appears to have been built on lies: The New York Times in 2017 released a lengthy exposé on Mayweather, Khaled, and the company. The Times noted that Centra Tech appeared to have lied to the public repeatedly, including allegedly creating fake employees and lying about a business deal with the credit card companies Visa and MasterCard. In the meantime, Centra Tech raised $32 million. Two of its founders were arrested in April 2018 on securities-fraud charges.

But there were hints, however, that the SEC was preparing to whack Khaled for promoting cryptocurrency offerings. Amid the Bitcoin boom in November 2017, the SEC released a statement warning the public that celebrities were getting paid fistfuls of money to promote new coin offerings and that many stars were likely not disclosing they were accepting those funds to promote the companies. Celebrities “who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws,” the SEC wrote last year.

Khaled was also warned separately that he was not properly disclosing other instances in which he was paid to promote products on social media, including in posts where he bragged about his love for Cîroc vodka.

Khaled has now, truly, played himself.

Your Commment

Email (will not be published)