The Securities and Exchange Commission has charged NBA Hall of Famer Paul Pierce with making false misleading promotional statements about the crypto token, EthereumMax.
The SEC charges allege Pierce didn’t disclose a payment of more than $244,000 of EMAX.
“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,” said SEC Chair Gary Gensler.
The order also alleges Pierce tweeted misleading statements related to EMAX, including tweeting a screenshot of an account showing large holdings and profits without disclosing that his own personal holdings were much lower.
Additionally, one of Pierce’s tweets contained a link to the EthereumMax website, which provided instructions for how potential investors could purchase EMAX tokens.
The SEC’s order finds Pierce violated the anti-touting and antifraud provisions of federal securities laws. Without admitting or denying the SEC’s findings, Pierce has agreed to pay a $1.1 million penalty and approximately $240,000 in disgorgement and prejudgment interest. Pierce also agreed to not promote any crypto asset securities for three years.
In October, Kim Kardashian agreed to pay $1.2 million to settle charges with the SEC for not disclosing the payment she received for the promotion of EthereumMax.
In 2021 during crypto’s bull run, numerous celebrities increased the hype around digital assets by endorsing various crypto tokens on their social media platforms — which can have major reach.
Other notable celebrity crypto endorsers have included Matt Damon, Tom Brady, Mike Tyson, Reese Witherspoon, Mark Cuban, DJ Khaled, Floyd Mayweather, Justin Bieber, and Madonna.
A poll by Bankrate from September 2022 found that U.S. investor comfort with cryptocurrencies has plummeted since last year, particularly among millennial and Gen-Z investors who use social media as a primary investing source.
Between 2021 and September 2022, comfort with cryptocurrencies fell by 41% for millennials.
“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,” Gensler added.