The 2017 rush of investors into cryptocurrencies hooked several celebrities, too, who you’d sometimes find hawking particular digital coins on platforms like Instagram or Twitter.
But what wasn’t disclosed was that several of those influencers were being paid in order to offer these seemingly full-throated endorsements.
The SEC on Thursday brought its first charges against two of the celebrities — DJ Khaled and boxer Floyd Mayweather — for backing several initial coin offerings and encouraging their fans to participate, but not disclosing the side payments. Both Khaled and Mayweather settled the charges and are paying hundreds of thousands of dollars in fines.
The SEC’s slap is particularly telling for a few reasons: It comes at a time when the U.S. government is still wrestling with how exactly to regulate the world of cryptocurrency. Is it like a stock? Like a dollar? It comes at a time when other branches of the federal government, like the Federal Trade Commission, are similarly pressing celebrities to disclose any sponsored content on Instagram.
And more broadly, it comes at a time when there’s a lot of doomsaying about the cryptocurrency economy, which rocketed to historic highs about a year ago but has fallen hard since — and especially so this month. The SEC’s crackdown — the first of its kind, it says — doesn’t do anything to brighten the mood.
Whether or not there are mom-and-pop investors who felt hoodwinked by some of their favorite celebrities, neither Khaled nor Mayweather offered an apology or admitted any wrongdoing for their promotional gambits. Both said they would not promote any securities, not just initial coin offerings, for a few years, according to the SEC.
Here are a couple representative posts from the last few months. Mayweather sounds genuinely excited about the projects — until you learn that he was being paid to post them.