The United States Securities and Exchange Commission has announced a $1.4 million settlement with former NBA player Paul Pierce for allegedly promoting a token project on social media.
In a February 17 announcement, the SEC said Pierce touted the EthereumMax (EMAX) token through social media channels without disclosing that he had received payment to promote it and made “false and misleading statements” about the project. According to the SEC, the promoter paid the former NBA star $244,000 worth of EMAX in addition to posting messages allegedly showing misleading information about profits on Twitter.
Financial regulators have previously targeted celebrities promoting the EthereumMax token. The SEC announced a $1.2 million settlement in October 2022 with Kim Kardashian for the same charges as Pierce – in that case, he failed to disclose a $250,000 payment for publishing a story on his Instagram promoting the EMAX token.
“This case is another reminder for celebrities: The law requires you to disclose to the public from whom and how much you will be paid to promote investments in securities, and you cannot deceive investors when you own a security,” he said. SEC Chairman Gary Gensler. “When celebrities endorse investment opportunities, including crypto-asset securities, investors should be careful to research if the investment is right for them, and should understand why the celebrity is making the endorsement.”
Today we announced the indictment of former NBA player Paul Pierce for promoting the EMAX token on social media without disclosing the payment he received for the promotion and making false and misleading promotional statements about the same crypto asset.
– US Securities and Exchange Commission (@SECGov) February 17, 2023
As part of the settlement, Pierce paid a penalty of $1,115 million to the SEC and approximately $240,000 in disgorgement and agreed not to promote any crypto projects considered securities for three years. SEC Enforcement Director Gurbir Grewal added:
“Investors have a right to know whether security promoters are unbiased, and Mr. Pierce failed to disclose that information.”
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The SEC’s move is the latest in what critics call a “regulation by enforcement” approach to crypto projects that are considered securities. On February 9, the financial regulator announced that it had reached a settlement with Kraken, in which the crypto exchange agreed to stop offering services or staking programs to US clients.