On February 17, the Securities and Exchange Commission (SEC) charged NBA Hall of Famer Paul Pierce with illegally promoting the EMAX token on his social media accounts. The EMAX token was offered and sold by EthereumMax.
According to the complaint, Pierce has agreed to pay a penalty of $1,115,000, plus approximately $240,000 in disgorgement and prejudgment interest, without admitting or denying guilt, to avoid greater sanctions from regulators. He is also prohibited from promoting any crypto asset securities for three years.
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
Showing Fake Investments to Promote EMAX?
The SEC alleges that Pierce fraudulently promoted the purchase of the EMAX token without publicly disclosing that EthereumMax paid him over $244,000 in EMAX for promoting it.
The accused even posted screenshots of a fake account that showed significant profits and holdings using EMAX. However, it was all fake, as “his own personal holdings were, in fact, much lower than those in the screenshot.”
Gary Gensler, SEC Chairman, stated that this lawsuit is a reminder to all influencers and celebrities that authorities are vigilant and ready to act against those who use their fame to promote the purchase of unregistered securities.
“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,”.
In addition, he called on investors to conduct their own research before believing in the “investment opportunities” that celebrities promote, as they often encourage investments that can end in million-dollar losses.
Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, said US laws are clear regarding the promotion of crypto-asset securities. Therefore, celebrities and anyone else must report the nature, source, and compensation received for promoting cryptocurrencies.
SEC Has Its Eye on Celebrities Who Promoted EMAX
From model and influencer Kim Kardashian to famous boxer Floyd Mayweather Jr., celebrities have faced scrutiny from the SEC for promoting unregistered crypto-asset securities.
In early October 2022, Kardashian agreed to pay a fine of $1.26 million for using her social media to promote investments on EthereumMax, without revealing she had received a payment of $250,000 for doing so. Paul Pierce followed the same Modus Operandi.
For his part, Mayweather used the “Love” logo to promote several crypto assets, including EMAX and failed to disclose that he was paid $200,000.
The SEC is increasingly cracking down on those who promote securities (even in the form of crypto assets) without disclosing their compensation. Pierce and others are proof that even celebrities cannot act outside the law and that regulators will act if necessary to protect investors from fraudulent practices.
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