The US Securities and Exchange Commission (SEC) has settled with retired NBA player Paul Pierce for $1.4 million over allegations that he promoted a crypto token project on social media without proper disclosure.
The SEC accused Pierce of receiving $244,000 worth of EMAX tokens to promote them on Twitter and making false and misleading statements about the same crypto asset.
According to the SEC, in relation to EMAX, Pierce made misleading statements on Twitter, such as sharing a screenshot of an account displaying sizable holdings and profits without revealing that his personal holdings were significantly lower.
Additionally, one of his tweets included a link to the EthereumMax website, which offered guidance on how to buy EMAX tokens.
In a statement, SEC Chair Gary Gensler stressed the importance of disclosure and transparency in celebrity endorsements, especially for crypto asset securities. He warned investors to research investment opportunities carefully and understand why celebrities are promoting them.
Gurbir S. Grewal, the Director of the Division of Enforcement at SEC, added that investors have the right to know whether a promoter of security is unbiased, and Pierce failed to disclose this information.
Reminder To Celebrities Over Crypto Promotion
As part of the settlement, Pierce agreed to pay a penalty of $1,115,000 and approximately $240,000 in disgorgement and prejudgment interest.
He further agreed not to promote any crypto asset securities for three years. The SEC’s investigation is still ongoing and being conducted by the Enforcement Division’s Crypto Assets and Cyber Unit.
This settlement serves as a reminder to all celebrities and individuals promoting securities that federal securities laws require them to disclose the nature, source, and amount of compensation they receive in exchange for the promotion.
It also reinforces the need for investors to be cautious and does their research before investing in any securities, especially those promoted by celebrities.
Nevertheless, Pierce’s settlement with the SEC emphasizes the importance of transparency and disclosure in celebrity endorsements and the promotion of securities.
The SEC continues to monitor and investigate cases of potential securities fraud, especially in the fast-moving world of cryptocurrencies, and investors should always exercise due diligence.
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