DJ Khaled and Floyd Mayweather are facing legal troubles from victims of a cryptocurrency scam. The affected investors say the pair contributed to the Centra Tech ICO scam.
Famous Boxer and Celebrity Music Producer in Hot Soup
According to TMZ, the two celebrities are being sued for endorsing the Centra Tech cryptocurrency ICO. Back in September 2017, both the boxer and the music producer published tweets endorsing the Centra Tech project.
DJ Khaled, in particular, called the project “the ultimate winner” and “a game changer.” On the back of these glowing recommendations from personalities as well-known as the pair, the Centra Tech ICO raked in more than $32 million during the crowdsale.
The plaintiffs in the class action suit say the endorsements by the two celebrities provided legitimacy for the Centra Tech scam. Inside sources say TMZ obtained court documents showing the pair as co-defendants in the case.
The Centra Tech Cryptocurrency ICO Scam
Earlier in the year, the United States Securities and Exchange Commission (SEC) charged the Centra Tech founders with wire fraud and securities fraud. According to the indictment, the founders of the project falsely claimed to have partnerships with Visa and MasterCard.
Based on these fake claims, they sold a debit card that was purportedly capable of allowing users to convert Centra tokens (CTR) in fiat or spend the CTR tokens. According to the SEC, such a partnership did not exist. The three founders – Robert Farkas, Raymond Trapani, and Sohrab Sharma – face up to five years in prison.
The indictment was a part of a sweeping clampdown against ICO fraud by the Commission beginning in late 2017. At the time, the SEC was worried that unscrupulous elements were using the mania around cryptocurrencies to defraud unsuspecting victims in numerous “pump and dump schemes.”
Celebrity Endorsement and Fake Cryptocurrency Businesses
DJ Khaled and Floyd Mayweather aren’t the only celebrities to be caught up in shady cryptocurrency businesses. Others like rapper The Game and Paris Hilton have also touted ICO projects that turned out to be nothing more than a website, and no actual product.
The SEC issued warnings to celebrities telling them that such endorsements could violate U.S. securities law. According to the Commission, business promotional activities without any an accompanying disclosure of compensation for such endorsements could land celebrities in hot water. There have also been instances when ICOs published fake endorsements luring people to invest in the project.
Do you think celebrities should stay away from endorsing cryptocurrency businesses? Please share your thoughts with us in the comment section below.
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