Despite cryptocurrency startups being relatively niche, there’s no shortage of celebrities looking to get in on the fun. However, celebrity involvement doesn’t necessarily mean legitimacy.
On Tuesday, October 16th, the SEC charged the founders of an ICO called Centra with fraud, as reported by Fortune. The commission states that the group raised $32 million through a convoluted marketing campaign, alongside paid endorsements from celebrities such as the artist DJ Khaled and the boxer Floyd Mayweather.
Co-director of the SEC’s Division of Enforcement Stephanie Avakian detailed the reasonings:
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses, as the complaint alleges, these and other claims were simply false.”
On top of this, the co-founders of Centra, Sohrab Sharma and Robert Farkas, declared a partnership with both MasterCard and Visa. The collaboration was for a debit card that would enable users to utilize or convert their Centra currency into a local fiat. However, the SEC alleges that the partnership did not exist.
While neither Mayweather or Khaled were named, the two both shared the title of “official brand ambassador and managing partner” at Centra. Once the accusations went live, Mayweather deleted some posts related to his affiliation.
Whether or not it was intentional, the SEC has warned that celebrities could be charged with violating securities law should they not make clear the amount and the form of their payment. This news was made public after many stars began promoting coins last year.
Mayweather has also publicly praised Stox and the Hubii Network, while model Paris Hilton supported Lydian Coin. Interestingly enough, neither of Mayweather’s other promoted projects have much of a product either.
In September of last year, on Twitter, Mayweather posted a photo of him holding a Centra debit card—one that allegedly doesn’t exist:
Spending bitcoins ethereum and other types of cryptocurrency in Beverly Hill https://t.co/q9VZ3MzpK8 pic.twitter.com/BYyOFUnm8W
— Floyd Mayweather (@FloydMayweather) September 15, 2017
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