Paul Pierce, an NBA Hall of Fame, was accused by the SEC on February 17 of illegally advertising the EMAX token on his social media sites. EthereumMax was the company that offered and sold the EMAX coin.
Per allegation (1), Pierce has accepted to pay a penalty of $1,115,000 in addition to roughly $240,000 in disgorgement & prejudgment interest. This is even though Pierce neither admits nor denies guilt in the matter.
This settlement (2) aims to prevent regulators from imposing greater punishments. Also, he is forbidden to promote any crypto asset securities for the next three years.
Not Disclosing Affiliation
The SEC asserts that Pierce engaged in fraudulent activity by encouraging others to buy EMAX tokens without making it publicly known that EthereumMax compensated him with more than 244,000 EMAX for promoting the tokens.
Even more damning, the accused published screenshots of a bogus account demonstrating considerable gains and holdings made through EMAX. However, the entire thing was a hoax since "his holdings were, in fact, substantially lower than those in the screenshot."
Gary Gensler, the Chair of the SEC, asserted that this litigation is a warning to all stars and celebrities that law enforcement agencies are watchful and ready to take action against individuals who employ their fame to advertise the buy of unregistered securities.
In addition, he urged people interested in investing in performing their investigation before believing the "investment options" promoted by celebrities, as celebrities frequently encourage transactions that can result in losses of a million dollars or more.
The Director of the SEC's Division of Enforcement, Gurbir S. Grewal, stated that United States laws are crystal clear regarding advertising crypto-asset securities. As a result, those in the public eye, including celebrities and anyone else, are obligated to disclose the kind, source, and amount of remuneration received for endorsing crypto.
The SEC Is Keeping a Close Watch on Celebrities Who Advertised for EMAX
Celebrities, including Kim Kardashian, a model and influencer, and Floyd Mayweather Jr., a famous boxer, have come under scrutiny from the Securities and Exchange Commission (SEC) for marketing unregistered crypto-asset securities.
Kim Kardashian Suffered the Same Fate Earlier
At the beginning of October 2022, Kim Kardashian made a deal to pay a fine of $1.26 million to use her platforms on social media to promote investments on EthereumMax without disclosing that she had received a reward of $250,000 for doing so.
Kardashian's guilty plea was entered at the beginning of October 2022. Paul Pierce used the same strategy.
Mayweather, for his part, promoted numerous crypto assets using the "Love" brand, one of which was EMAX, although he did not reveal that he was compensated $200,000 for doing so.
Those who advocate securities (even in the form of crypto assets) sans reporting their income are under greater scrutiny from the SEC.
Pierce and others like him are evidence that even celebrities cannot operate in a way that is contrary to the law and that authorities will take action to protect consumers from deceptive activities if it becomes essential to do so.