The SEC has charged NBA Hall of Famer Paul Pierce with making false and misleading promotional statements about the cryptocurrency EthereumMax.
According to the SEC charges, Pierce failed to disclose a payment of more than $244,000 in EMAX.
“This case serves as yet another reminder to celebrities: the law requires you to disclose to the public who pays you and how much you are paid to promote investment in securities, and you cannot lie to investors when you tout a security,” said SEC Chair Gary Gensler.
The order also claims Pierce made false statements about EMAX, including tweeting a screenshot of an account with large holdings and profits while failing to disclose that his own personal holdings were much lower.
Pierce’s tweets also included a link to the EthereumMax website, which detailed how potential investors could purchase EMAX tokens.
According to the SEC’s order, Pierce violated the federal securities laws’ anti-touting and anti-fraud provisions. Pierce has agreed to pay a $1.1 million penalty as well as approximately $240,000 in disgorgement and prejudgement interest without admitting or denying the SEC’s findings. Pierce also agreed to refrain from promoting any crypto asset securities for the next three years.
Kim Kardashian agreed to pay $1.2 million to settle SEC charges for failing to disclose the payment she received for promoting EthereumMax in October.
Several celebrities increased the hype around digital assets in 2021 during the crypto bull run by endorsing various crypto tokens on their social media platforms, which can have a large reach.
Matt Damon, Tom Brady, Mike Tyson, Reese Witherspoon, Mark Cuban, DJ Khaled, Floyd Mayweather, Justin Bieber, and Madonna are among the other notable celebrity crypto endorsers.
According to a September 2022 Bankrate poll, U.S. investor confidence in cryptocurrencies has dropped since last year, particularly among millennial and Gen-Z investors who use social media as their primary investing source.
Millennials’ comfort with cryptocurrencies fell by 41% between 2021 and September 2022.
“When celebrities endorse investment opportunities, including crypto asset securities, investors should exercise caution in determining whether the investments are appropriate for them, and they should understand why celebrities are making those endorsements,” Gensler added.