Are we ready for another cryptocurrency hangover?? Last week, the SEC fined boxer Floyd “Money” Mayweather and music producer DJ Khaled for taking undisclosed payments to promote ICOs. The move against the two celebrities is the highest-profile signal yet that the agency is far from done cracking down on sketchy ICOs. It might also be a good reason to start asking: how much could the hype of 2017 (which set the stage for this year’s crash) damage crypto’s prospects for mainstream adoption?
We first learned of Mayweather’s involvement with ICOs a year ago when it was revealed that he had promoted a project called Centra. Centra’s ICO raised $30 million based on the promise of a cryptocurrency debit card. Then its organizers got hit with a class action lawsuit in which investors accused them of unlawfully selling US securities. Mayweather wasn’t named in the suit, but as we noted at the time, he wasn’t out of the woods. Now we know that Mayweather took $100,000 from Centra and $200,000 more from two other ICOs. Khaled made $50,000 in return for promoting Centra.
The SEC had already warned that celebrity-promoted ICOs might not be legal, stating that “celebrities and others” who used social media to promote ICOs may be breaking the law “if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.” The agency is likely to bring more charges against people who took undisclosed payments to promote ICOs. Broadly speaking, plenty of projects launched during the mania of 2017 appear to be sitting ducks for SEC enforcement actions, and that’s likely a factor behind what could be a long crypto winter.
Meanwhile, the goal of achieving mainstream adoption for applications beyond cryptocurrency speculation—such as smart contracts—may have been set back “drastically,” writes blockchain author Michael Casey for CoinDesk. “It’s not irreparable, but it’s fair to say we have a problem when the mainstream now equates crypto with bubbles, scams and losses.” A similar downturn hit the cryptocurrency world before. After the 2013 Bitcoin bubble burst, the recovery didn’t begin until 2016 and spilled into 2017. But that was before Floyd Mayweather began hyping token sales. This time, writes Casey, “it was the Regular Joes who lost their shirts, not the basement-dwelling bitcoin mining hobbyists.” And that could mean the damage will be more difficult to recover from. | 
