US Securities and Exchange Commission Fined nba Hall of Famer Paul Pierce $1.4 million for promoting a cryptocurrency token, the latest athlete to run into headwinds for his promotion of the troubled digital asset. This is what we know:
- Pierce promoted the EMAX tokens sold by EthereumMax on social media without disclosing that he was paid $244,000 worth of tokens to do so.
- Pierce tweeted misleading statements, according to the SEC, including tweeting an account screenshot showing large holdings and gains without disclosing that his own personal holdings were much lower.
- Without admitting or denying the findings, Pierce agreed to pay a penalty of $1,115,000 and approximately $240,000 in repayment; Pierce also agreed not to promote cryptocurrencies for three years.
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Pierce is following in the footsteps of Kim Kardashian, who was fined $1.26 million by the SEC for promoting the same crypto token. Ironically, Pierce's fine comes after a federal judge threw out a civil lawsuit targeting the celebrities who pumped Ethereum two months ago.
In that case, the judge wrote: โThe court acknowledges that this action raises legitimate concerns about the ability of celebrities to easily persuade millions of undiscerning followers to purchase snake oil with unprecedented ease and scope. But while the law certainly places limits on those advertisers, it also expects investors to act reasonably before basing their bets on the zeitgeist."
SEC Chairman Gary Gensler took a different view, quoted in the press release announcing Pierce's fine as saying, "This case is another reminder to celebrities: The law requires you to disclose to the public who and how much you care about." they pay to promote investing in securities, and you cannot lie to investors when you promote a security. When celebrities endorse investment opportunities, including crypto asset values, investors should be careful to research whether the investments are right for them, and they should know why celebrities are making those endorsements."
There is several lawsuits pending against athletes for their promotion of failing crypto platform FTX, including Tom Brady, David Ortiz, Shohei Ohtani, and Naomi Osaka. In their cases, they did not promote a specific token, but rather the crypto platform.
However, the plaintiffs in those lawsuits are seeking an order that the accounts sold by FTX were in fact securities and therefore covered by federal securities regulations.
The SEC's order found that Pierce violated the anti-advertising and anti-fraud provisions of the federal securities laws.
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(Photo: Brian Fluharty/USA Today)
