Two celebrity backers of the infamous Centra initial coin offering (ICO) – notably undefeated boxing legend Floyd Mayweather and DJ Khaled, have just agreed a settlement with the Securities and Exchange Commission (SEC). The agreement will see the two celebrities pay fines that collectively amount to more than $700,000. As a result, this should be a stark warning to high profile figures that agree to promote a crypto-related project that, insofar that the SEC are looking to clamp down on the phenomenon.
The Centra Saga – What Happened?
For those that do not recall the Centra ICO saga, let’s quickly recap. In late 2017, a project known as Centra Tech engaged in an ICO to help fund their cryptocurrency debit card service. The project claimed to have formed partnerships with both Visa and MasterCard, subsequently using this as a key marketing metric. It was also claimed that users could use the pre-paid debit cards to freely spend cryptocurrency holdings at any physical or online merchant that accepts Visa or MasterCard, as well as at ATM terminals.
These claims, alongside public endorsement by both Floyd Mayweather and DJ Khaled, resulted in the ICO fund raising campaign collecting the cryptocurrency equivalent of more than $32 million.
Fast forward to April 2018 and the SEC – the hugely influential regulator of the U.S. financial services industry, closed the project down. The SEC reported that those behind the project – namely Robert Farkas and Sam Sharma, had promised investors an innovative technology that was based on nothing more than a “web of lies”.
With both Farkas and Sharma subsequently arrested by law enforcement, the SEC quickly turned its attention to the celebrity endorsers.
How Much Does it Cost to Get an A-List Celebrity to Promote an ICO?
In the case of Floyd Mayweather, who earned a reported $275 million in his recent bout with Conor McGregor, the boxer raked in $300,000 across three separate ICO campaigns, including that of Centra. One such task saw Mayweather Tweet “starts in a few hours. Get yours before they sell out, I got mine” [referring to the Centra ICO), to his almost 8 million Twitter followers.
In response, Mayweather agreed to pay the SEC a total of $614,775 – which broken-down, amounts to the $300,000 ICO-related payments he received, an additional $300,000 fine, plus interest.
Regarding DJ Khaled, it is believed the celebrity was paid $50,000 by the Centra team, as per the SEC. Khaled was personally ordered to settle a fine of more than $150,000, which included the $50,000 payment he received, plus a fine and interest.
Celebrity Backers on the Rise
This isn’t the first time that the SEC have flexed their muscles when it comes to celebrity cryptocurrency endorsements. Earlier in the year it was reported that John McAfee – the anti-virus pioneer turned cryptocurrency evangelist, charged a range of blockchain projects over $100,000 to Tweet public support to his 800,000+ Twitter fan base.
Once such example of McAfee’s paid-for public support was Verge (XVG), which resulted in an amplification of the project’s token, in direct correlation to the celebrity’s tweet. In response to pressure from the national regulator, McAfee later Tweeted that “Due to SEC threats”, he was no longer involving himself with ICO promotion.
We also reported last month that Lionel Messi – the global Soccer star that plays for Spanish La Liga team Barcelona, has associated himself with a blockchain project.
Although it remains to be seen how much the Finney mobile phone project, which claims to be the world’s first blockchain-based phone, have agreed to pay Messi, one would imagine that the sum is somewhat sizeable, especially when one considers the Soccer player’s global reach of more than 90 million Twitter followers.