They don't want you to invest in Bitcoin-style cryptocurrencies.
Seriously: The Securities and Exchange Commission this past Wednesday warned people to be wary about investing in the extremely sketchy, online-only currencies advertised lately by celebrities — including Floyd Mayweather, Paris Hilton, Jamie Foxx, rapper the Game, and none other than Miami's own DJ Khaled.
After Bitcoin became the world's first mainstream,
The problem, the feds say, is celebs such as Khaled have been taking payouts to promote some of the shadier currencies. Celebs "who endorse an investment often do not have sufficient expertise to ensure that the investment is appropriate and in compliance with federal securities laws," the SEC wrote Wednesday.
The commission later warned that buyers "relying on a particular endorsement or recommendation [should] learn more regarding the relationship between the promoter and the company and consider whether the recommendation is truly independent or a paid promotion."
Though the SEC didn't mention any celebs by name, the statement almost certainly refers in part to Khaled because it comes mere days after the New York Times published a huge investigation into a possibly fraudulent cryptocurrency-accessing debit card called Centra, which was founded by a trio of tech bros from Miami.
The three paid Khaled, among other big names, to stump for them. On September 27, Khaled posted an Instagram image of himself holding up a tiny gray Centra-branded debit card, which the company claimed customers could use to spend crypto-cash anywhere Visa cards were accepted. (More about that in a second.) Centra told the Times it got in touch with Khaled and boxer Mayweather through social contacts in Miami.
"I just received my titanium Centra debit card," Khaled wrote online while holding a bottle of Diddy's apple-flavored Cîroc vodka in his other hand. He sat under a portrait of painter Jean-Michel Basquiat. "The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens! Use your bitcoins,
But there were two problems here: One, Khaled didn't mention he was getting paid by the currency's Miami-based operators to stump for them. That's a potential violation of securities law.
(A spokesperson for Khaled didn't immediately respond to an email from New Times sent yesterday evening.)
And two, it turns out Centra was possibly built atop a mountain of fraud. According to the Times piece, Centra was
But the Times reported that cracks began to show pretty quickly. A computer programmer noted that Edwards appeared to be made-up, and accused the trio of using a stock photo to pretend he existed. The Centra team threatened to sue the programmer but later removed every reference to Edwards online and deleted a few other employee profiles that outside observers had questioned.
Sharma himself also has a long history of lawsuits and has been accused multiple times of stiffing business partners or trying to fraudulently sell cars he didn't own. He has also reportedly been evicted twice.
Perhaps most important, the card's central claim fell through: Centra hadn't even applied, let alone been approved, to operate on the Visa network. After the Times began asking questions, Centra pulled mentions of Visa from its site and instead said it would operate on the MasterCard network instead because that system doesn't require
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For now, the Times notes the Centra team has raised $30 million and still plans to move forward with the product. But the SEC says it wants people to be aware that celebrities such as Khaled are not experts when it comes to investing in digital currency or investing in general.
"Any celebrity or
It appears Khaled might have finally broken his own golden rule: He has, it seems, played himself.