DJ Khaled Is Being Charged With Cryptocurrency Fraud
On November 29, DJ Khaled was charged with cryptocurrency fraud. This comes after the producer and music mogul failed to disclose payments he received for promoting investment in Initial Coin Offerings.
In a press release that was issued by the SEC, Khaled failed to disclose a $50,000 payment from Centra Tech Inc., which he promoted on his social media accounts as a “game changer.” Although Khaled himself has yet to confirm or deny the new charges that he faces, he has already agreed to pay $50,000 in disgorgement, a $100,000 penalty and $2,725 in prejudgment interest.
In addition to agreeing to pay for these penalties, Khaled is not to promote any securities, digital or anything similar at all for the next two years.
“These cases highlight the importance of full disclosure to investors,” said Enforcement Division Co-Director Stephanie Avakian on the importance of this case. “With no disclosure about the payments, Khaled’s ICO promotions may have appeared to be unbiased, rather than paid endorsements.”
Enforcement Division Co-Director Steven Peikin also elaborated on the importance of this case, saying that investors should be cautious of which celebrity endorsements they receive. “Investors should be skeptical of investment advice posted to social media platforms and should not make decisions based on celebrity endorsements.” Peikin continued, “Social media influencers are often paid promoters, not investment professionals, and the securities they’re touting, regardless of whether they are issued using traditional certificates or on the blockchain, could be frauds.”
The SEC’s investigation of DJ Khaled’s involvement in this case remains ongoing.