The US Securities and Exchange Commission (SEC) is continuing its efforts to eradicate misleading crypto promotions after charging former NBA star Paul Pierce with a $1.4m fine.
Pierce was charged the penalty after it was found he failed to disclose his dealings with ethereumMax (eMax) to the US financial regulator after he was paid $244,000 worth of eMax to promote the token on his Twitter account.
The SEC deemed Pierce’s Twitter crypto touting to be “false and misleading promotional statements”, after he posted images of his eMax holdings and profits which were later to be found to be “much lower than those in the screenshot”.
“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,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.
“Investors are entitled to know whether a promoter of a security is unbiased, and Mr. Pierce failed to disclose this information.”
Pierce, along with Floyd Mayweather and Kim Kardashian, was found by the SEC as a part of a lawsuit to be misleading investors on the promotion of eMax, with Kardashian also coughing up a $1.26m fine last October.
This is a part of the US regulator’s wider crackdown on crypto promotion within the country, focusing on addressing which tokens are listed as securities and which are not.
The SEC’s crackdown has been intensified since the collapse of FTX and in the aftermath of its downfall, other celebrities such as Tom Brady, Stephen Curry and Larry David have also been embroiled in their own lawsuit over advertising FTX services.
SEC Chair, Gary Gensler, stated that this $1.4m fine to Pierce should serve as a reminder to all celebrities to be wary of what cryptocurrency they are promoting.
He stated: “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.
“When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements.”
Pierce was ultimately found to be in violation of the US anti-touting and anti-fraud provisions of the SEC. Without confirming nor denying the SEC’s findings, the NBA star agreed to pay a $1.115m fine and approximately $240,000 in disgorgement.
Additionally, the Celtic icon also agreed to not promote any crypto asset securities for three years.