Legendary member of the National Basketball Association, Paul Pierce has agreed to pay $1.4 million to resolve claims by the US Securities and Exchange Commission that he promoted a cryptocurrency token, EthereumMax (EMAX) token without disclosing that he was being paid for the promotions.
The SEC has also charged Pierce, a former professional football player known by the moniker “The Truth,” of making false and misleading statements regarding the token. According to the commission, Pierce did not concur with or refute its claims.
Pierce violated the SEC’s rules by failing to disclose his pay and by asserting that he earned more money in May 2021 from the EMAX token than he did in a full year at ESPN. This remark was “materially deceptive,” according to the SEC’s lawsuit.
As part of the settlement, the NBA All-Star also consented to refrain from endorsing any crypto asset securities for a period of three years, according to the SEC.
The SEC Chairman, Gary Gensler said in a statement that cases like this serve as a reminder to celebrities who endorse cryptocurrencies. Addressing celebrities, he stated that “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.”
Celebrities and Crypto-related Lawsuit
This is not the first time a celebrity has been in trouble with the SEC for promoting the EMAX token. Kim Kardashian in October 2022 was indicted for promoting EMAX tokens and she agreed to resolve claims regarding her promotion by paying $1.3 million.
The District Court for the Central District of California listed various celebrities in December 2022 for advocating Yuga Labs’ non-fungible tokens (NFT) offerings, which ultimately resulted in investment losses. Paris Hilton, Justin Beiber, Jimmy Fallon, and Madonna are a few of the celebrities named.
As far back as 2017, DJ Khaled and Floyd Mayweather were both sanctioned by the SEC for failing to disclose payments received for shilling an ICO.
To avoid situations like this, the SEC chair has again warned celebrities against endorsing cryptocurrency tokens without declaring that they are being paid for them. In line with this, Gary warns investors not to invest in cryptocurrencies because they are being shilled by a celebrity but they should also ensure they conduct their due diligence before investing.
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