It was common to see social media influencers and even some celebrities promote ICOs or cryptocurrency offerings over the past year as the digital currency market was in a frenzy. The U.S. Securities and Exchange Commission has been looking into these promotions and is now handing penalties to those who promoted ICOs without disclosing their investments in the coin.
ICOs or Initial Coin Offerings are how some companies are raising funds these days. They issue tokens to prospective investors in return for their contributions which are then traded on cryptocurrency exchanges.
There has been no shortage of ICOs that have turned out to be a scam. Countless people have lost their money to such offerings which is why the SEC has been closely looking into those promoting ICOs.
“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion,” the SEC cautions on its website.
Boxer Floyd Mayweather and music producer DJ Khaled both promoted ICOs that they were invested in themselves. The SEC said this week that they have been fined for promoting these ICOs. While neither Mayweather nor Khaled admitted or denied the SEC’s charges, they have agreed to pay a combined $767,500 in fines and penalties.