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 agreed to pay a $1,115,000 penalty, plus approximately $240,000 in repayment interest and pre-judgment interest, without admitting or denying fault, to avoid further penalties from regulators. He is also banned from promoting crypto asset securities for three years.
Today we are announcing charges against former NBA player Paul Pierce for promoting EMAX tokens on social media without disclosing the payment he received for the promotion and for making false and misleading promotional claims about the same crypto asset.
— US Securities and Exchange Commission (@SECGov) February 17, 2023
Show 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 more than $244,000 in EMAX for promoting it.
The defendant even posted screenshots of a fake account showing significant earnings and holdings using EMAX. However, it was all false, as “his own personal properties of him were, in fact, much lower than those on the screenshot.”
SEC Chairman Gary Gensler said this lawsuit is a reminder to all influencers and celebrities that authorities are watching 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: You are required by law to disclose to the public who and how much you are paid to promote investing in securities, and you cannot lie to investors when promoting a security.”
In addition, he called on investors to carry out their own investigations before believing in the “investment opportunities” promoted by celebrities, since they often encourage investments that can end in millions in losses.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said that US laws are clear regarding the promotion of crypto asset securities. Therefore, celebrities and anyone else should disclose the nature, source, and compensation received for promoting cryptocurrencies.
The SEC has its eye on celebrities who promoted EMAX
From model and influencer Kim Kardashian to famed boxer Floyd Mayweather Jr., celebrities have faced SEC scrutiny for promoting unregistered crypto asset securities.
In early October 2022, Kardashian agreed to pay a $1.26 million fine for using her social media to promote investments in EthereumMax, without disclosing that she had been paid $250,000 for doing so. Paul Pierce followed the same Modus Operandi.
For his part, Mayweather used the “Love” logo to promote various 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 (including 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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