Paul Pierce, an NBA Hall of Famer, has been charged by the Securities and Exchange Commission (SEC) for promoting EMAX tokens without disclosing the compensation he received for the endorsement and for making false and misleading statements about the crypto asset’s security.
The SEC order finds that Paul Pierce failed to reveal that he was paid over $244,000 worth of EMAX tokens to promote the tokens on Twitter. Furthermore, Pierce tweeted misleading statements related to EMAX. That includes tweeting a screenshot of an account showing large holdings and profits. He did not disclose that his own personal holdings were much lower than those in the screenshot. In addition, one of Pierce’s tweets contained a link to the EthereumMax website. Consequently, that provided instructions for potential investors to purchase EMAX tokens.
The SEC charged Pierce with violating anti-touting and anti-fraud provisions of the federal securities laws. Pierce agreed to settle the charges by paying $1.409 million in penalties, disgorgement, and interest. The settlement also includes Pierce’s agreement not to promote any crypto asset securities for three years.
The SEC’s investigation is ongoing and is being conducted by the Enforcement Division’s Crypto Assets and Cyber Unit and the New York Regional Office.
The SEC’s order emphasizes the importance of disclosing the nature, source, and amount of compensation received in exchange for promoting a security. Federal securities laws require celebrities and other individuals promoting crypto asset securities to disclose this information. Morever, the SEC’s Director of Enforcement, Gurbir S. Grewal, stated that investors are entitled to know whether a promoter of a security is unbiased, and Mr. Pierce failed to disclose this information.
Gary Gensler Warns Celebrities
The SEC Chair, Gary Gensler, warned celebrities and investors to be cautious regarding potentially unlawful celebrity-backed crypto-asset offerings. He emphasized that the law requires public disclosure of compensation for promoting securities. Lying to investors about a security is illegal. When celebrities endorse investment opportunities, including crypto-asset securities, investors should research the investments and the reasons for the endorsements.
The SEC’s statement urges investors not to make investment decisions based solely on the recommendations of celebrities or influencers. Chair Gensler’s video also emphasizes the importance of conducting research and consulting with experts before investing in securities. Investors should take the time to understand the risks and benefits of any investment opportunity. They must consider their financial goals and circumstances before making an investment decision.
In recent years, many celebrities have endorsed cryptocurrencies, often without disclosing their financial interest in the asset. Additionally, SEC has taken a firm stance on these types of endorsements, and several celebrities have faced charges for their endorsements of crypto assets. The SEC has emphasized the importance of transparency and disclosure in the promotion of securities, regardless of the promoter’s celebrity status.
In conclusion, the SEC’s charges against Paul Pierce serve as a reminder to investors and celebrities of the importance of transparency and disclosure in promoting securities. Investors should be cautious when considering investment opportunities, conduct thorough research, and seek expert advice before making investment decisions. Celebrities and influencers must disclose the nature, source, and amount of compensation received for promoting securities, and they should not make false or misleading statements about the securities.