Refusing to take note of the warnings issued by U.S. SEC, DJ Khaled and Floyd Mayweather are now facing a lawsuit against their ICO endorsements. Three people from Centra Tech ICO have been arrested and 91000 ether were seized, which counts to US$ 18 million at the time of writing.
According to celebrity news publication TMZ, a class action lawsuit has been slapped against music producer DJ Khaled and boxing champion Floyd Mayweather, who were also ICO social media influencers. The suit has been filed by individuals who lost their money by investing in the Centra Tech initial coin offering. The two prominently endorsed the Centra Tech ICO on social media platforms with Khaled calling it a ‘game changer’ while the boxing champ even nicknamed himself ‘Floyd Crypto Mayweather’, ostensibly fully convinced of the ICO’s prospects.
In their suit, the plaintiffs allege that partly as a result of the efforts put in by Mayweather and Khaled, Centra Tech managed to raise approximately US$32 million in the ICO which was floated last year. The plaintiffs are now seeking to be compensated for their losses plus damages by the founders of Centra Tech as well as by the celebrity endorsers and promoters.
ICO Operators Indicted
The class-action lawsuit now raises the stakes for the founders of Centra Tech who were indicted with four counts of fraud (securities fraud, conspiracy to commit securities fraud, wire fraud and conspiracy to commit wire fraud) in May this year by the U.S. Attorney’s Office for the Southern District of New York. In the indictment citation, the operators and founders of Centra Tech namely Raymond Trapani, Robert Farkas, and Sohrab Sharma were accused of making material omissions and misstatements with a view of deceiving investors:
“…the defendants conspired to capitalize on investor interest in the burgeoning cryptocurrency market. They allegedly made false claims about their product and about relationships they had with credible financial institutions…”
From US$67 million to US$18 million…
The lawsuit against the music star DJ Khaled and the international boxing star Floyd Mayweather could surprise many fans, but it warning stating that celebrity ICOs involve high risk and endorsing personalities may face lawsuit it ICO doesn’t meet the set standards. This warning was floated by the Securities and Exchange Commission of United States last year.