The Securities and Exchange Commission announced a $1.4 fine against former NBA player Paul Pierce on Feb. 17 for not disclosing payments for promoting cryptocurrency.
The SEC reported that Pierce leveraged his fanbase and celebrity platform on social media to tout EMAX tokens sold by EthereumMax, without disclosing that he was paid for the promotion. The agency alleges he made false claims about the crypto asset and delivered misleading messages. Pierce agreed to settle the charges with $1.4 million in penalties and interest, according to the SEC.
paul pierce vs. the sec pic.twitter.com/vXfwQrwVQz
— mike taddow (@MikeTaddow) February 17, 2023
The SEC concluded that Pierce received over $244,000 in EMAX tokens in exchange for promoting their brand on Twitter. It confirmed that Pierce issued misleading tweets, including a screenshot of an account that contained significant profit, leading fans to believe it was his. His tweets then directed the public to the EthereumMax website and encouraged the purchase of EMAX tokens.
“This case is yet another reminder to celebrities: The law requires you to disclose to the public from whom and how much you are getting paid to promote investment in securities, and you can’t lie to investors when you tout a security,” SEC representative Chair Gary Gensler said.
“When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them,” Gensler said. He went on to say “they should know why celebrities are making those endorsements.”
The SEC reinforced its position on promotional transparency.
Former Celtics star Paul Pierce will pay $1.4 million after being charged by the SEC for “making false misleading promotional statements about the crypto token, EthereumMax”
More details from @YahooFinance: https://t.co/0k6NUejqzf pic.twitter.com/WLwUykc7fR
— Yahoo Sports NBA (@YahooSportsNBA) February 17, 2023
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” Gurbir S. Grewal, Director of the SEC’s Division of Enforcement said.
Grewal defended consumer rights and addressed issues of bias that seep into undisclosed advertisements.
“Investors are entitled to know whether a promotor of a security is unbiased, and Mr. Pierce failed to disclose this information,” he said, according to the SEC. (RELATED: Kim Kardashian Pays SEC $1.26 Million Over Crypto Promotion)
Today we announced charges against former NBA player Paul Pierce for touting EMAX tokens on social media without disclosing the payment he received for the promotion and for making false and misleading promotional statements about the same crypto asset.
— U.S. Securities and Exchange Commission (@SECGov) February 17, 2023
The SEC’s order concluded that Pierce violated the anti-touting and anti-fraud provisions of federal securities laws.
Pierce did not admit to or deny the findings of the SEC.
He agreed to a $1,115,000 penalty to have the charges dismissed, in addition to $240,000 in disgorgement and prejudgment interest, according to the SEC.
The NBA star is restricted from promoting crypto asset securities for a period of three years.