The SEC Came for DJ Khaled. They’re Coming For You Next, Bro

Yesterday, the Securities and Exchange Commission announced that they were fining music executive/producer/Snapchat personality DJ Khaled for accepting undisclosed payments to promote a cryptocurrency scam. Preeminent professional boxer and accomplished amateur wife-beater Floyd Mayweather was also fined. Both will have to return the fees they received plus heavy punitive fines.

The two men didn’t admit guilt in the settlement, and Mayweather hasn’t even deleted one of his allegedly promotional tweets. But the action marks a new phase in the SEC’s work to clean up the crypto landscape. Most SEC efforts so far have involved the organizers of so-called Initial Coin Offerings, but the fines against Khaled and Mayweather were the first to go after ICO promoters under so-called “touting” rules, which restrict the paid promotion of securities without disclosure. Mayweather, who was paid $100,000 to promote an ICO called Centra Coin and another $100,000 to promote two other ICOs, will pay back those fees plus another $300,000 in penalties and $14,775 in interest. Khaled will repay his $50,000 fee from Centra plus a $100,000 penalty and $2,725 interest.

Congratulations, guys—you played yourself. But if it’s any comfort, you could have company soon.

The SEC issued a strong warning about touting more than a year ago, writing that “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.”

That “other individual” is important. The SEC has targeted two high-profile violators first, a bit unusual for an agency that sometimes prefers to establish precedent in smaller cases before moving up the food chain. But the law doesn’t just apply to celebrities: The SEC’s next move could be against smaller entities or individuals that have concealed payments to promote ICOs.

That could, and in our opinion definitely should, include the swarming rat’s nest of corrupt media outlets and personalities that have presented their work as objective journalism or analysis. Just this week, Reuters reported evidence that YouTube personalities, ICO reviewers, and writers for the Forbes contributor network accepted payments from ICO issuers to provide coverage that masqueraded as objective endorsements. In our own investigation published in October, we found a highly formalized system of pay-for-play at supposed crypto “news” outlets like NewsBTC and Cryptovest.

Those fake-news schemes, like Khaled and Mayweather’s endorsements, helped fleece would-be crypto investors of more than $1 billion in just the first two months of this year.

Some of those websites, and especially YouTubers, may have taken payments totaling as much or more than Khaled and Mayweather are accused of taking. YouTuber Christopher Greene, according to Reuters, took $7,500 for just one video. Khaled and Mayweather might have gone down first simply because investigating multiple payoffs and complex relationships—also including PR agencies that act as middlemen—is more challenging than identifying a few big checks to celebrities subject to public scrutiny.

But the wheels of justice are, like DJ Khaled himself, all about that grind—justice just grinds a little slower. Yesterday’s fine for Khaled and Mayweather comes more than a year after their endorsements of Centra. The Centra organizers themselves were arrested in April, more than seven months after their allegedly fraudulent sale. Just yesterday, the FBI arrested Jared Rice over his AriseBank ICO scam. That’s nearly ten months after the SEC shut Arise down.

Everyone who has ever fraudulently promoted an ICO, then, should be sweating right now. The clock is ticking, and it’s ticking for you.