NBA Hall of Famer Paul Pierce has been charged by the US Securities and Exchange Commission (SEC) for violating anti-fraud and anti-touting rules by promoting a cryptocurrency on his Twitter account without disclosing that he was paid for it. The SEC accused Pierce of misleading the public about the investment performance of EthereumMax when he tweeted an image of an account holding large profits while his own portfolio was not doing as well. The ex-NBA player agreed to pay $1.4 million in penalties, disgorgement, and interest, and not to promote any crypto assets for three years.
Pierce misled public by promoting crypto asset without disclosure
Pierce had promoted EthereumMax in a tweet he posted in May 2021 after he was fired from ESPN, stating that he had made more money with the crypto asset than with his former employer in a year. Financial regulators have been scrutinizing the crypto industry since investors lost billions of dollars in scams or account hacks. In October 2021, Kim Kardashian paid $1.26 million in a similar settlement with the SEC, linked to the same EMAX cryptocurrency, and agreed not to promote crypto for three years.
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Celebrities warned to disclose their endorsement fees
SEC Chair Gary Gensler said, “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.” The SEC also emphasized that investors should be cautious when celebrities endorse investment opportunities, including crypto asset securities. Other celebrities, including Matt Damon, Paris Hilton, Jamie Foxx, Ashton Kutcher, Gwyneth Paltrow, and Dennis Cole, have publicly backed various digital coins.
Class-action lawsuit against EthereumMax
Pierce, Kardashian, and boxer Floyd Mayweather were named as co-defendants in a class-action lawsuit filed by crypto investors against EthereumMax in 2021. Mayweather and music producer DJ Khaled had settled with the SEC over cryptocurrency promotions in 2018.
