NBA Hall of Famer Paul Pierce was charged by the Securities and Exchange Commission on Friday for his unlawful touting and misleading statements about EMAX tokens, a crypto asset securities offered and sold by EthereumMax -- no relation to the second-largest cryptocurrency.
The Boston Celtics legend agreed to settle the charges and pay $1.409 million in penalties, disgorgement, and interest, per SEC press release.
Pierce failed to disclose he was paid more than $244,000 worth of EMAX tokens to promote the crypto asset on Twitter. The 45-year-old tweeted a screenshot of an account showing large holdings and profits without disclosing his own personal holdings were in fact much lower than those in the screenshot. One of Pierce's tweets also contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
"(ESPN), I don’t need you," Pierce tweeted on May 26, 2021. I got (EthereumMax). I made more money with this crypto in the past month then I did with y’all in a year. TRUTH shall set u Free. My own Boss."
Pierce had won a class-action lawsuit with Kim Kardashian and other celebrities, but that was a separate case from the federal government's investigations. New England Patriots owner Robert Kraft and Tom Brady were among multiple celebrities and athletes to be named in a class-action lawsuit over their promotion of FTX, which went bankrupt.
"This case is yet another reminder to celebrities: 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," SEC Chair Gary Gensler said, per a press release. "When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements."
"The federal securities laws are clear that 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 are entitled to know whether a promotor of a security is unbiased, and Mr. Pierce failed to disclose this information."
Pierce did not admit or deny the SEC's findings but did agree on the payment settlement. He also agreed to not promote any crypto asset securities for three years.
