SEC Warns Against Celebs Crypto Endorsements After $1.4M Fine

He National Stock Market Commission (SEC) warns celebrities to be careful when endorsing cryptocurrencies.

The commission issued that warning on Friday (February 17) after announcing that Paul Pierce, a former star for the Boston Celtics, agreed to pay a $1.4 million fine for failing to disclose that he had been paid to back cryptocurrency ethereumMax (EMAX).

“This case is yet another reminder to celebrities: You are required by law to disclose to the public who and how much you are paid to promote investing in securities, and you cannot lie to investors when promoting a security,” SEC Chairman Gary Gensler said in a press release.

"When celebrities endorse investment opportunities, including crypto-asset stocks, investors should be careful to research whether the investments are right for them, and should know why celebrities are endorsing those securities."

According to the SEC, Pierce did not disclose that he was paid more than $244,000 in EMAX to promote the coin on Twitter. That promotion, the commission said, included a tweeted screenshot showing an account with much larger holdings than Pierce actually owned.

Pierce has agreed not to promote crypto assets for at least three years, the SEC said, noting that he neither admitted nor denied the commission's findings.

Pierce was part of a trio of celebrities, along with Kim Kardashian and Floyd Mayweather, named last year in a class action lawsuit which accused them of making misleading statements about EMAX.

The lawsuit was dismissed in December, although the billionaire Kardashian was fined $1.3 million by the SEC.

This latest fine comes as several people are facing lawsuits over their role in promoting bankrupt cryptocurrency exchange FTX.

Last week a group of investors from the company sued a group of investment firms — including Sequoia Capital, Thoma Bravo, and Paradigm — for promoting FTX.

The lawsuit claims the companies participated in a campaign in 2021 to promote their own investments in FTX, adding “an air of legitimacy” to a platform that would soon fall apart and turn the cryptocurrency industry upside down.

FTX's collapse has led to its own celebrity lawsuits. TO class action lawsuit Filed shortly after the company went bankrupt, it accuses Tom Brady, Gisele Bündchen, Stephen Curry, Larry David and other famous faces who appeared in FTX ads of promoting unregistered securities.