SEC sues former NBA star Paul Pierce for engaging in crypto fraud
- Paul Pierce will settle allegations that he failed to disclose payments to promote the cryptocurrency by paying $1.4 million in penalties and disgorgement.
- Paul Pierce has agreed, according to the SEC, not to advertise any crypto asset securities for three years.
Paul Pierce, a former player in the National Basketball Association, was sued by the Securities and Exchange Commission (SEC) for “touting” EthereumMax (EMAX) tokens without disclosing that he had been compensated for doing so.
The SEC claimed in a statement on Friday that Pierce received $244,000 in EMAX tokens but failed to disclose the payments while promoting the product on Twitter. However, despite having “far lower” holdings than he reported, he allegedly implied through screenshots that he had a significant number of EMAX tokens. Penalties and disgorgement of $1.409 million will be paid by Pierce.
According to the SEC’s announcement, the member of the NBA Hall of Fame has agreed not to “promote any crypto asset securities for three years.”
Kim Kardashian and the SEC previously reached a settlement on related allegations. For failing to disclose a $250,000 payment, the reality TV personality was fined $1.26 million. The penalty is “yet another reminder to celebrities,” according to SEC Commissioner Gary Gensler, to disclose if they are getting paid to advocate investments. He said:
“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 regulator took this move a day after filing a lawsuit against Terraform Labs and Do Kwon for allegedly engaging in fraudulent securities sales. The yield-bearing Anchor protocol and the different tokens Terraform produced among the alleged securities law violations that, in essence, affected the entire Terra/Luna ecosystem, according to the SEC.
Recently, the SEC has been on the run, resolving complaints with the cryptocurrency exchange Kraken last week and announcing that it would prosecute Paxos, the stablecoin issuer, for its Binance USD unit.
With regard to its enforcement actions in the cryptocurrency industry, the SEC has increased its aggressivity. Terraform, a stablecoin issuer, and CEO Do Kwon, was accused of fraud by the regulatory body on Thursday. Charges regarding the alleged unregistered issuance and sale of securities were presented by the SEC in January against cryptocurrency lenders Genesis and Gemini.