The two celebrities, as CCN reported, had been among the most prolific ICO promoters, pumping crypto tokens on social media while sometimes failing to disclose that the posts - which in several cases promoted illegal securities offerings - were paid-for s.
Notably, the New York Times reported in October of previous year that two of the three Centra Tech Inc.'s cofounder were indicted shortly after their company's ICO for perjury. They neither admitted nor denied the regulator's charges.
Mayweather has to pay over $600,000 in penalties and Khaled is set to pay over $150,000. Khaled, in comparison to Mayweather, got off scot-free, as the American music entrepreneur has been required to pay "only" $100,000 in penalties, and $50,000 in disgorgement.
Mayweather has agreed not to promote securities for three years and help with the investigation. The agency had previously charged the project's founders over matters relating to securities fraud. It turns out that there's more to posting an endorsement on Instagram than just uploading a photo, because DJ Khaled got in some trouble with the SEC over a promotion for a cryptocurrency from past year.
This post remains on Mayweather's Instagram account, but the caption has since been changed to eliminate anything ICO-related.
The company's ICO or "initial coin offering" in 2017 saw Centra Coin rake in $32 million and the lawsuit claims that their celebrity endorsements had much to do with the initial success.
"Endorsements and glossy marketing materials are no substitute for the SEC's registration and disclosure requirements as well as diligence by investors", said Steve Peikin, who is the co-director of the SEC's enforcement division.
"These cases highlight the importance of full disclosure to investors", said the enforcement division co-director Stephanie Avakian.
The boxer was also banned from promoting any securities for three years.
In 2017, the SEC issued its DAO Report, which said coins sold in ICOs could be securities and that anyone who offers and sells securities in the U.S. has to comply with federal securities laws.