High-profile boxer Floyd Mayweather and music producer DJ Khaled have been dismissed from a lawsuit brought by investors in a fraudulent initial coin offering (ICO,) according to a court document filed on May 13.
The celebrities had been involved in promoting Centra Tech’s ICO — but a judge has ruled that the investors who brought the legal action failed to prove they bought tokens as a direct result of the pair’s actions.
According to the court document, Mayweather had posted tweets of himself holding the startup’s debit card along with the caption:
“Spending bitcoins Ethereum and other types of cryptocurrency in Beverly Hills…”
The former professional boxer had also tweeted ahead of the ICO’s launch, telling fans to get tokens “before they sell out, I got mine.”
In his filing, Judge Robert Scola said the plaintiffs had failed to prove that they followed Mayweather’s Twitter account or that they saw his posts — adding that two of the investors involved in the lawsuit had actually purchased their CTR tokens before the boxer began promoting the ICO.
Khaled had posted comparable promotional content on Instagram, and was dismissed from the lawsuit on similar grounds.
Last November, the U.S. Securities and Exchange Commission (SEC) charged the pair with unlawfully advertising ICOs — and claimed Mayweather had failed to disclose a $100,000 payment from Centra Tech, while Khaled failed to disclose the $50,000 he received for promoting the startup.
In a settlement where neither party admitted to nor denied the charges against them, Mayweather was fined more than $600,000, while Khaled was fined in excess of $150,000.
The SEC has previously warned the public that celebrity endorsements of ICOs could be illegal if they fail to reveal the compensation they are receiving for the promotion.
In April 2018, the SEC arrested and charged three co-founders of Centra Tech with securities and wire fraud of more than $25 million that was linked to the ICO. While the company claimed it had plans to launch a debit card backed by Visa and Mastercard, it later transpired that the startup had no agreement in place with the payment giants, and had relied upon allegedly false or misleading marketing materials.