Two high-profile celebrities are believed to have been issued with lawsuits after they used social media to endorse an alleged cryptocurrency scam.
Boxing star Floyd Mayweather and rapper DJ Khaled took to websites Twitter and Instagram to promote a coin known as Centra Tech – which, it now appears, may be fraudulent.
In one photo posted on Twitter, Floyd Mayweather – who has a blue tick of account authorisation on the platform – is seen holding a card.
The caption reads: “Spending bitcoins ethereum and other types of cryptocurrency in Beverly Hill (sp)”, plus a link to his personal Facebook page.
In a post on Instagram, DJ Khaled holds a similar card. His caption begins with: “I just received my titanium centra debit card. The Centra Card & Centra Wallet app is the ultimate winner in Cryptocurrency debit cards powered by CTR tokens!”
However, the US Securities and Exchange Commission (SEC) has now brought a number of allegations against Centra Coin.
It claims, for example, that some of the details of company executives listed on the website of the firm behind Centra Tech were in fact not real.
It also claims that the firm did not have the proper authorisation to operate and that it may have even misled some of its investors.
In addition, the firm’s founders – Sohrab “Sam” Sharma and Robert Farkas – were taken into custody in April of this year. They are believed to face a whole host of criminal charges, including conspiracy, wire fraud and securities fraud.
They are alleged to have defrauded investors of over $32 million US dollars as part of the alleged scam, a sum which is equivalent to just under £25 million British pounds at the time of writing.
The SEC also levied charges against them. At the time, the SEC said that the advertising was a major part of the investigation.
“We allege that Centra sold investors on the promise of new digital technologies by using a sophisticated marketing campaign to spin a web of lies about their supposed partnerships with legitimate businesses”, Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, said in a statement.
“As the complaint alleges, these and other claims were simply false.”
There is no suggestion that the celebrities involved were aware of the problems with Centra Tech or involved in the fraud itself.
However, their decision to advertise the coin has led to potential legal implications for them.
Investors have now apparently brought a lawsuit against both the two celebrities and those who set up the firm, and it is believed to be worth millions of US dollars.
Celebrity endorsements of cryptocurrencies are now relatively common. Those behind the coins or the initial coin offerings (ICOs) are attracted to the large social media followings which A-listers have, and sums of money are often exchanged in return for promotional posts.
However, other celebrities have also been caught up inadvertently in scandals as a result. A recent case in India, for example, saw Bollywood actress Shilpa Shetty in the news after she advertised the allegedly fraudulent Kashh Coin scheme, although there was again no suggestion that she knew what was taking place.