Boxer Floyd Joy Mayweather, Jr., left, and hip-hop producer DJ Khaled Mohamed Khaled, right, were charged with securities fraud and ordered to pay nearly $1 million in fines for promoting a cryptocurrency ICO scam on social media.
The feds charged Mayweather, 41, and Khaled, 43, with illegally promoting an Initial Coin Offering (ICO) on social media.
An Initial Coin Offering is similar to an Initial Public Offering (IPO), but investors buy cryptocurrency coins instead of company shares (stocks).
The feds allege that Mayweather and Khaled promoted cryptocurrency investments to their unsuspecting Instagram.com and Twitter.com followers by directing them to invest in Centra, Stox.com, and other cryptocurrency companies.
Mayweather is accused of taking $100,000 from Centra Tech and $200,000 from two other companies to promote cryptocurrencies to potential investors.
In multiple Instagram.com posts, Mayweather claimed he earned millions of dollars in the cryptocurrency market. He directed his followers to purchase cryptocurrency coins through companies that paid him.
In one post, Mayweather posed on a private jet with stacks of cash laid out on the table in front of him. He captioned the image: "Champion Predictions: I'm gonna make a $hit t$n of money on August 26th."
He added: "Im gonna make a $hit t$n of money on August 2nd on the Stox.com ICO."
In another photo on Instagram.com, Mayweather boasts: "Spending bitcoins ethereal and other types of cryptocurrency in Beverly Hills with my Titanium Centra Card. Join Centra's ICO on Sept. 19th #TMT #TBE."
Securities and Exchange Commission (SEC) officials filed a civil action against Centra Tech's founders, alleging their ICO was fraudulent.
Officials from the U.S. Attorney's Office for the Southern District of New York also filed criminal charges against Mayweather and Khaled that could land them in a federal prison for a minimum of 10 years.
Mayweather was ordered to pay $600,000 in fines plus $14,775 in interest, while Khaled was hit with fines of $150,000 and $2,725 in interest.
Additionally, both Mayweather and Khaled are banned from promoting cryptocurrencies online or offline for two years.
Mayweather and Khaled are awaiting trial on the federal charges.
The Feds previously warned celebrities and their management about promoting products and services on social media without informing their followers that they are being paid for endorsing the products.
Celebrities must include the words "AD" or "PAID PROMOTION" in their social media posts to avoid prison time or federal fines.