The Securities and Exchange Commission (SEC) indicted former NBA player Paul Pierce on February 17, 2023 for promoting and making false statements about EMAX tokens.
Paul Pierce made and promoted false and misleading promotional comments about EMAX, a token offered and sold by EthereumMax, on social media platforms. Pierce did not reveal how much he was paid for the promotion during the trial.
However the SEC order discovered that he was paid over $244,000 in EMAX tokens to promote the token on Twitter. Rather than admit the charges, Pierce chose to settle the charges by paying $1.409 million as repayment, penalties and interest as imposed by the court.
The SEC warrant also found that Pierce tweeted malicious information about EMAX, including a screenshot of an account with lots of tokens and profits.
Pierce did not share his account holdings which were, in fact, lower than the ones in the picture. His tweets have a link to the EthereumMax websitewhere potential investors would buy EMAX tokens by following the instructions.
The verdict
The SEC order found that the former NBA player violated the Anti-fraud and anti-promotion sections of federal securities laws.
These provisions dictate that the promoter must disclose all material information, report certification and financial statements of executive officers, ‘Change Act, Section 10(b) and Rule 10b-5’. The provisions also cover liability for securities offerings, false and misleading information, and liability of the controlling person.
The SEC investigation is being led by several SEC officials, including Jon A. Daniels, Pamela Sawhney, and an officer in the Enforcement Division’s Cyber and Crypto Assets Unit, Amanda Rios, who found sufficient evidence against Pierce.
Pierce neither admitted nor denied the charges, but agreed to pay $240,000 in repayment and pre-trial interest and a $1,115,000 fine. He also agreed not to campaign for any crypto asset value for the next three years.
The investigations are still ongoing under the supervision of Crypto Assets and Cyber Unit officers David Hirsch, Mark R. Sylvester and Jorge G. Tenreiro.
SEC Chairman Gary Gensler issued a statement warning celebrities that they are required by law to share with the public the sponsor of any security investment campaign they are running and how much they are earning from the campaign.
Celebrities also have no right to lie to investors when they control security. He also warned investors to be wary of celebrity-endorsed investment opportunities, including crypto asset securities.
Investors must, however, perform due diligence on investments and know what motivates public figures to make endorsements.
SEC Division Enforcement Director Gurbir S. Grewal said federal securities laws dictate that anyone, including celebrities, who promotes any crypto asset security must provide the source, nature and amount of compensation. he received for the campaign.
The SEC official also noted that investors have a right to know about promoters’ biases. Not revealing these details is what got Pierce in trouble.