SEC Chairman Warns Celebrities Promoting Crypto Amid Recent Enforcement Actions
SEC Chairman Warns Celebrities Promoting Crypto Amid Recent Enforcement Actions
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The United States Securities and Exchange Commission has announced a $1.4 million settlement with former NBA player Paul Pierce for allegedly promoting a token project on social media.
In a Feb. 17 announcement, the SEC said Pierce touted EthereumMax (EMAX) token through social media channels without disclosing that he received payment for the promotion and made “false and misleading statements” regarding the project . According to the SEC, promoters paid the former NBA star $244,000 worth of EMAX in addition to him posting messages that allegedly contained misleading information about earnings on Twitter.
The financial regulator has previously targeted celebrities promoting EthereumMax tokens. The SEC announced a $1.2 million settlement with Kim Kardashian in October 2022 for similar charges Pierce faced – in this case she failed to disclose a $250,000 payment, to post a story on their Instagram promoting EMAX tokens.
“This case is another reminder for celebrities: the law requires you to disclose to the public who pays you and how much to promote investment in securities, and you must not lie to investors when you promote a security.” , he told SEC Chairman Gary Gensler. “When celebrities are endorsing investment opportunities, including crypto-asset securities, investors should carefully research whether the investments are right for them and understand why celebrities are making these endorsements.”
Today we announced charges against former NBA player Paul Pierce for promoting EMAX tokens on social media without disclosing the payment he received for the promotion and for making false and misleading advertising claims about the same made crypto asset.
— U.S. Securities and Exchange Commission (@SECGov) February 17, 2023
As part of the settlement, Pierce paid a $1.115 million penalty to the SEC and approximately $240,000 in disgorgement, and agreed not to fund crypto projects that qualify as securities for three years. SEC Enforcement Director Gurbir Grewal added:
“Investors have a right to know whether a promoter of a security is impartial, and Mr. Pierce has not disclosed that information.”
See Also: Breaking: Circle Shatters Rumors of Planned SEC Enforcement Actions
The SEC’s move was the latest move in what many critics have dubbed a “regulation by enforcement” approach to crypto projects, which the agency viewed as securities. On Feb. 9, the financial regulator announced that it had reached an agreement with Kraken in which the crypto exchange agreed to no longer offer staking services or programs to US customers.
