Boston Celtics great Paul Pierce has been charged with unlawfully touting and making misleading statements about crypto security, the Securities and Exchange Commission announced Friday.
In a statement, officials said, “The Securities and Exchange Commission today announced charges against former NBA player Paul Pierce for touting EMAX tokens, crypto asset securities offered and sold by EthereumMax, on social media without disclosing the payment he received for the promotion and for making false and misleading promotional statements about the same crypto asset.”
The athlete allegedly received $244,000 in EMAX tokens for encouraging his Twitter followers to buy the crypto-asset, and among other things posted a screenshot of an investment account showing a large portfolio with profits, but his was actually “much lower”.
Pierce, who neither admits nor denies the allegations, has agreed to settle them by paying a million-dollar fine, making him the latest celebrity to go bad for jumping on the seemingly lucrative crypto-market bandwagon, which has recently been rocked by mismanagement scandals.
“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,” SEC chief Gary Gensler said. “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.”
EMAX is a digital “culture token” launched in May 2021 that’s built on the Ethereum blockchain. Despite raising a number of red flags, the crypto was swiftly promoted by a number of high-profile celebrities within weeks of being launched. Kim Kardashian and Floyd Mayweather Jr have also come under fire for their role in promoting Emax, with Karashian similarly paying a $1.26 million fine in October last year for failing to disclose that she was paid to promote the currency.
“You can’t lie to investors when you tout a security,” he said. “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.”
The regulator’s action comes a day after it sued Terraform Labs and founder Do Kwon on allegations of fraud and selling unregistered securities. The SEC alleged that basically the entire Terra ecosystem was implicated in securities law violations, including the yield-bearing Anchor protocol and the various tokens Terraform issued.