Is Paul Pierce Deserving of Induction into the Hall of Fame?
The Securities and Exchange Commission today charged former NBA player Paul Pierce with making false and misleading promotional statements about EMAX tokens, crypto asset securities offered and sold by EthereumMax, on social media without disclosing the payment he received for the promotion. Paul Pierce agreed to pay $1.409 million in penalties, disgorgement, and interest to settle the charges.
According to the SEC’s order, Paul Pierce failed to disclose that he was paid more than $244,000 in EMAX tokens to promote the tokens on Twitter. According to the SEC’s order, Paul Pierce also made misleading statements about EMAX, including tweeting a screenshot of an account with large holdings and profits without disclosing that his own personal holdings were much lower than those in the screenshot. In addition, one of Pierce’s tweets included a link to the EthereumMax website, where potential investors could purchase EMAX tokens.
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. 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 make those endorsements.
Any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. Investors have the right to know whether a security promoter is unbiased, and Mr. Pierce failed to disclose this information.”
According to the SEC’s order, Paul Pierce violated the federal securities laws’ anti-touting and anti-fraud provisions. Pierce agreed to pay a $1,115,000 penalty and approximately $240,000 in disgorgement and prejudgment 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.
Pamela Sawhney, Jon A. Daniels, and Amanda Rios of the Enforcement Division’s Crypto Assets and Cyber Unit, as well as Alison R. Levine, Victor Suthammanont, Kerri Palen, and Lisa Knoop of the New York Regional Office, are leading the SEC’s ongoing investigation. The case is being overseen by the Crypto Assets and Cyber Unit’s Mark R. Sylvester, Jorge G. Tenreiro, and David Hirsch.
The SEC’s warning about potentially illegal celebrity-backed crypto asset offerings can be found here. You can watch SEC Chair Gensler’s video warning investors not to base investment decisions solely on the recommendations of a celebrity or influencer here.
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