cryptovest.com
After months of investigation, the US Securities and Exchange Commission charged professional boxer Floyd Mayweather and Khaled Khaled, known as DJ Khaled, for promoting the token sale of Centra while not disclosing payments. Celebrity promotion has been viewed as especially harmful, as it increases the reach of token sales and misleads buyers. Celebrity endorsements sell tokens to persons outside the crypto community, where knowledge and skepticism are not so widespread, and buyers may be misled based on testimonies of past cryptocurrency gains.
Mayweather received payments for three ICOs in total, including $100,000 from Centra Tech Inc. Khaled received $50,000 before touting the ICO on social media. Mayweather promoted two other ICOs for a payment of $200,000.
"These cases highlight the importance of full disclosure to investors," said Enforcement Division Co-Director Stephanie Avakian. "With no disclosure about the payments, Mayweather and Khaled's ICO promotions may have appeared to be unbiased, rather than paid endorsements."
In the past year, the SEC became especially vigilant of ICOs attempting to reach a wide buyer base, especially with high-profile promotions. Investigations continue on separate projects, with the special focus of testing whether the tokens sold were in fact unregistered securities.
The Centra project unraveled after its founders were arrested as they attempted to leave the US. CTR, the digital asset behind the project, dropped literally to zero as all exchanges delisted it, causing immediate losses. While other ICOs have also lost more than 95% of their value, the sudden unraveling of CTR happened during more optimistic market times. Additionally, CTR trading was promoted in a Binance trading competition that further increased the public profile of the asset.
Centra promised a multi-cryptocurrency debit card and a worldwide payment system, but failed to deliver a product before the token crashed. CTR tokens are held in 15,900 addresses, although the exact number of people affected may be lower. Curiously, the tokens are still seeing some transfers, although there are no listed active markets.
Centra raised $32 million in a token sale in September 2017, when Ethereum (ETH) traded between $300 and $400. It is unknown what happened to the ETH haul, but the Centra founders were fond of demonstrating a luxury lifestyle.