Category Archives: Floyd Mayweather

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SEC Cracks Down on ICO Promoters, Social Media Influencers

SEC

ICO promoters and other social media influencers will now be targeted by the US Securities and Exchange Commission (SEC). The SEC is not known to be friendly towards ICOs and has a number of cases against token launches.

The recent settlement with music mogul DJ Khaled and professional boxer Floyd Mayweather are examples of SEC coming down hard on people who promote ICOs without informing the regulator about the compensation received. This had been warned by SEC a year back when it said, “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.”

In November, it again emphasized the role of promoters in ICOs, this time turning towards investors: “Investors should be skeptical of investment advice posted to social media platforms, and should not make decisions based on celebrity endorsements. 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 move is definitely going to affect ICO promotions in the United States. With most ICOs declared securities under its regulations, SEC chairman Jay Clayton said, “Many of the ICOs that you see and you talk about, they are securities. And if you’re going to offer or sell securities, you have to do so in compliance with our laws.”

Coinbase, for example, has been working very closely with the US regulators and even with its wish to add five tokens to its listing, has only been able to do only two in the last seven months. Listing of an unauthorized token that is a security can lead to indictment for illegally distributing unregistered securities.

The penalties are heavy, with fines being double to that of money received. Mayweather was fined USD 600,000 for promoting three different ICOs in return for USD 300,000.

 

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James Rodriguez Launches JR10 Coin in Wave of Superstar Crypto Endorsements

James Rodriguez, an icon of Colombian football commonly known as James, has announced that he is partnering with SelfSell to launch his own crypto token called the JR10, reports USA Today.

The launch of the JR token, so named after his number 10 position in the Columbian squad, will elevate him to being the first active international player to move into crypto space through the launching of his own asset.

In next month’s World Cup in Russia, James, who also plays for German club Bayern München, will lead a Columbian squad competing against group members Japan, Senegal, and Poland.

Rodriguez is not the first footballer to embrace the blockchain space following Barcelona and Argentina star Lionel Messi’s recent affiliation with Sirin Labs who have marketed a blockchain smartphone with the superstar’s endorsement. Michael Owen, ex Liverpool and England International, also recently unveiled his merchandising, Owen Coin, supported by the Singapore-based Global Crypto Offering Exchange (GCOX).

The exchange scored another coup in March, this time signing a boxer to promote the exchange. Philippines Senator, Manny Pacquiao, better known for being the only eight-division world boxing champion, invested in the company which specializes in allowing celebrities to create their own digital currencies.

Sportsmen joining other crypto-crazy celebrities dipping their toes into fintech water include Jamie Foxx, Paris Hilton, football superstar Luis Suarez, rapper The Game, and stand-up comedian Kevin Hart and Canadian two-time speed skating world record holder Ted-Jan Bloemen who became the first cryptocurrency-sponsored athlete, according to Cryptovest.

The most notable event this year was American Boxer Floyd Mayweather’s endorsement of blockchain firm Stox to 16 million Instagram followers raising USD 33 million in 34 hours. This resulted in charges being made against the company by the US Securities and Exchange Commission (SEC) over allegations that the (ICO) was a fraudulent activity.

Rodriguez claimed that he will be involved in a range of activities following the launch including interacting with his fans, suggesting that the coin can be used to “become a new engine to grow the global football market”.

 

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Centra Tech Founders Indicted by Grand Jury

The Attorney General of the Southern District of New York has announced that the founders of the cryptocurrency-based company Centra Tech Raymond Trapani, Sohrab Sharma, and Robert Farkas, have been indicted by a grand jury. This essentially means that charges against the founders have been formalized and the case will proceed to trial.

Centra Tech was developing a credit card which streamlined the process of spending cryptocurrency. Users could deposit their coins in an account linked to the credit card, and then when they want to make a purchase it works like a normal credit card by converting the cryptocurrency to USD.

Famous heavyweight boxer Floyd Mayweather had endorsed Centra Tech and put some posts on Instagram and Twitter showing how he was going around town buying things with the Centra Tech card, but these posts have since been deleted.

In order to raise money, Centra Tech released their own cryptocurrency in an initial coin offering (ICO) that raised over USD 30 million. ICOs are quite typical in the cryptocurrency world and usually occur without anyone being arrested, but where Centra Tech went wrong is they claimed to have partnerships with Visa, MasterCard, and Bancorp. This claim resulted in substantial investment, especially since Centra Tech used celebrity endorsements and glossy marketing materials to make themselves seem legitimate.

This attracted the attention of the Securities and Exchange Commission (SEC), which discovered that Centra Tech had no partnership with Visa, MasterCard, or Bancorp. The SEC halted the ICO and charged the founders with orchestrating a fraudulent ICO. They also charged Centra Tech with selling unregistered securities.

It is up for debate whether a cryptocurrency ICO counts as selling securities, but in this case, the SEC has decided the Centra Tech token does. The definition of a security is a financial instrument that holds monetary value, which is quite broad and could theoretically mean that any given cryptocurrency is a security. It is illegal in the United States to sell securities without registering with the SEC.

The Justice Department issued its own charges against the founders for conspiring to commit, and the commission of securities and wire fraud in connection with a scheme to induce victims to invest more than USD 25 million in investments through material misrepresentations and omissions.

The founders of Centra Tech were arrested prior to the Grand Jury Indictment and are sitting in jail until the trial is complete. Approximately USD 60 million of the founders’ money has been seized by authorities.

 

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Mayweather-Endorsed ICO Founders Charged with Fraud

The US Securities and Exchanges Commission(SEC) has charged Centra Tech co-founders, Sohrab Sharma and Robert Farkas, with fraud. Farkas was arrested over the weekend attempting to flee the US.

Their coin offering has been suspended after raising USD 32 million selling “unregistered securities”. The charge has been made by the SEC against Sharma and Farkas of “orchestrating a fraudulent coin offering”.

The SEC made a statement reporting that both Sharma and Farkas had no relationship with Visa, Bancorp, and Mastercard after claiming that they would be developing financial products backed by both credit card companies.  Cease and desist letters were issued by the above companies.

It is alleged that Sharma and Farkas sought out and paid celebrities to endorse the ICO, including boxer Floyd Mayweather and DJ Khaled. The agency also accuses the co-founders of creating fictitious executives and false marketing materials. Centra Tech claimed to have a Harvard MBA and banker Michael Edwards as a co-founder as CEO along with a Jessica Robinson as chief financial officer. Neither of these people actually existed.

A statement by the SEC alleges that “the defendants relied heavily on celebrity endorsements and social media to market their scheme”, going on to point out that “endorsements and glossy marketing are no substitute for the SEC’s registration and disclosure requirements”.

The SEC made it quite clear in January of this year that it wasn’t ready to ban coin offerings, but promised to chase down firms abusing the industry and selling unregistered assets, claiming “that its the bad behaviour of the people taking advantage of the technology we want to look at”.

This year the SEC hinted at cracking down on ICOs as it believes that many offerings are being conducted illegally.  SEC Chairman Jay Clayton suggested that “their promotors and other participants are not following our security laws. Some people say that’s because the law isn’t clear. I don’t buy that for a moment”.

Further regulation is still under discussion.

 

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