Following the lawsuits against Binance from the SEC, the exchange and its CEO have filed a motion of dismissal.
The press release, entitled “Two Celebrities Charged With Unlawfully Touting Coin Offerings” details the reason for the charges owes to the fact that they did not disclose that they were being paid to endorse the initial coin offering (ICO) Centra – a controversial token which has been brought to light as a money-making scam. This is the first case in which the SEC is charging individual entities who are not actively involved in the ICO and have only been involved in promoting the coin.
Regarding the legalities of the situation, the report states:
“Without admitting or denying the findings, Mayweather and Khaled agreed to pay disgorgement, penalties, and interest. 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. In addition, Mayweather agreed not to promote any securities, digital or otherwise, for three years, and Khaled agreed to a similar ban for two years. Mayweather also agreed to continue to cooperate with the investigation.”
In April of this year, information came out which pointed to malicious behavior from the Centra founders – who were already under allegations of creating the scam token – outlining the extent to which they were conning. The SEC released a document which highlights conversations the founders had with one another and the rabbit hole goes deeper than one might want to imagine. From swearing to killing off fictitious characters, the Centra case is riddled with evidence against those involved in the con.
Unfortunately, with celebrity endorsements, it is easy for vulnerable investors to fall prey to their idol’s promotion tactics. As pointed out by the SEC’s Enforcement Division Co-Director Steven Peikin:
“Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”