Floyd Mayweather and Khaled Escape filed suit against ICO investors for fraud
According to court documents submitted on May 13, high-profile boxer Floyd Mayweather and music producer DJ Khaled have been sued by investors for fraudulent ICO lawsuits.
The celebrities were involved in the ICO of Centra Tech, but the judge ruled that investors who filed lawsuits failed to prove that their purchase of the virtual currency was a direct result of the promotion of the two stars.
According to court documents, Mayweather released Twitter to showcase the tweets that held the startup debit card and used the following title: "Bet Bitcoin Ethereum and other types of cryptocurrencies in Beverly Hills… …"
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The former professional boxer also sent a tweet before the release of ICO, telling fans that "I finally got my token before they sold out."
In a file submitted, Judge Robert Scola stated that the plaintiffs failed to prove that they were following Mayweather’s Twitter account or that they saw his post – the judge also added that the two investors involved in the lawsuit actually started promoting in Mayweather. ICO purchased their CTR tokens before. Khaled posted similar promotions on Instagram and was dismissed for similar reasons.
In November last year, the US Securities and Exchange Commission (SEC) accused the illegal ICO of advertising, and claimed that Mayweather did not disclose Centra Tech's $100,000 payment, and Khaled did not disclose the $50,000 he received for promoting the startup.
The parties did not recognize or deny the settlement of their allegations, Mayweather was fined more than $600,000, and Khaled was fined more than $150,000.
The US Securities and Exchange Commission has previously warned the public that if they fail to disclose the proceeds they receive to promote ICO, ICO celebrity endorsements may be illegal.
In April 2018, the US Securities and Exchange Commission arrested and accused three co-founders of Centra Tech, which involved more than $25 million in securities and wire transfer fraud related to ICO. Although the company claims it plans to launch a debit card backed by Visa and MasterCard, it later found that the startup did not reach an agreement with the payment giant and relied on allegedly false or misleading marketing materials.
The US SEC follows the footsteps of Canada and punishes the CEO of Blockchain Corporation
According to a May 14th document, blockchain entrepreneur Alex Tapscott was fined $25,000 by the US Securities and Exchange Commission (SEC).
Tapscott is the CEO of NextBlock Global. When filing the application, the US Securities and Exchange Commission said that neither the Canadian company nor its issued securities were registered with the SEC. The 33-year-old young entrepreneur and his company were also ordered to stop and promised no longer violating the Securities Law.
According to the US Securities and Exchange Commission, NextBlock was established in June 2017 by Tapscott and three other companies to invest in blockchain companies and related digital assets. During the $16 million raise, the entrepreneur and his company made a false statement that four prominent blockchain professionals served as consultants. The SEC document adds:
“These false statements are part of the selling point of NextBlock’s fundraising activities: including the claim that NextBlock and Tapscott have contact and unparalleled relationships with opinion leaders, best entrepreneurs and top-level people in the regional chain community. NextBlock and Tapscott know or should Knowing that investors' statements about these advisers are not true and false. "The US Securities and Exchange Commission says this behavior violates the "Securities Law."
Earlier this week, Tapscott was fined $148,000 by the Ontario Securities Commission of Canada, and he agreed to attend a ethics seminar at the Canadian Business School as part of the penalty. And his company NextBlock itself has paid a fine of $520,000. These previous fines were also taken into account before the US Securities and Exchange Commission decided.
In 2017, NextBlock angered people, when Forbes contacted four high-profile people who were listed as consultants. Everyone denies any involvement and prompts the company to return the funds to investors.
Usually, stocks have a silent period before the initial public offering (IPO), during which the company must not publicly publicize the securities issue. The purpose of this is to clean up the information disclosure environment and prevent investors from being misled. In the United States, which regulates most of the virtual currency as a securities regulator, this method is followed in the supervision of the virtual currency ICO. According to CFR 230.506(b), for public ICO projects, investors must be qualified investors, and according to CFR230. 504(a) Advertising activities such as advertising media promotion, lecture promotion, etc. cannot be carried out for non-publicly issued projects.
On May 13, 2019, American boxer Floyd Mayweather and music producer DJ Khaled were sued by investors because the two celebrities advertised a virtual currency-related company, but their propaganda was not a strong call. Everyone buys it, but on Twitter, he expresses his own information about buying this virtual currency to his fans. So the court thinks this way is not a crime. But Floyd Mayweather and DJ Khaled were also fined $600,000 and $150,000 by the SFC. The reason is that the celebrities did not disclose to investors that they had received $500,000 and $100,000 in revenue from the virtual currency company.
Coincidentally, on May 14, Tapscott, the head of a Canadian blockchain investment company called NextBlock, also received a $25,000 penalties from the US Securities and Exchange Commission because of ICO's publicity, and the company and head of the company, Tapscott, before the US Securities and Futures Commission penalized A penalty of $600,000 has been received from the Canadian authorities. The reason for the punishment is that Tapscott promotes false information that investors cannot discern when raising funds. They claim that the company's project has an unusual relationship with four famous people in the blockchain industry. Although this propaganda proved to be false after the event, it still raised $16 million.
It can be seen that the supervision of the US Securities and Exchange Commission on ICO projects that can be publicly publicized is still focused on the authenticity of publicity. On the one hand, it is necessary to eliminate false propaganda that uses the star effect. At least investors have the right to know whether the star has received the promotion fee of the relevant virtual currency company. If the star refuses to admit that there is a relationship with the company, it depends on the investigation of the financial account of the relevant company by the regulator.
On the other hand, the use of false information that is not identifiable by investors directly in publicity will be severely punished. Under such circumstances, the company must return the funds raised to the investor, plus the interest generated during the period from the recruitment to the return. Of course, the strict control at the regulatory level is post-event supervision. To avoid false propaganda fraud, investors must also make careful research before investing. The United States has also made certain efforts in information disclosure in this regard, including the United States. The EDGAR database of the Securities and Futures Commission can understand the financial situation and aversion of the invested company. If the investor cannot find the investor project on the database, the investor must be vigilant, because the relevant company that is not registered with the CSRC is itself the object of punishment.
Original from: Cointelegraph
Source: Block Technology Research and Supervision