The U.S. Securities and Exchange Commission (SEC) recently charged NBA Hall of Famer Paul Pierce with illegally promoting the EMAX token on his social media accounts. Pierce has agreed to pay a penalty of $1,115,000, plus approximately $240,000 in disgorgement and prejudgment interest, without admitting or denying guilt, to avoid greater sanctions from regulators. He is also prohibited from promoting any crypto asset securities for three years.
The SEC alleges that Pierce fraudulently promoted the purchase of the EMAX token without publicly disclosing that EthereumMax paid him over $244,000 in EMAX for promoting it. He even posted screenshots of a fake account that showed significant profits and holdings using EMAX, when in fact his own personal holdings were much lower. SEC Chairman Gary Gensler warned celebrities that authorities are vigilant and ready to act against those who use their fame to promote the purchase of unregistered securities.
The SEC has also taken action against other celebrities such as Kim Kardashian and Floyd Mayweather Jr. for promoting unregistered crypto-asset securities. Kardashian agreed to pay a fine of $1.26 million for using her social media to promote investments on EthereumMax, without revealing she had received a payment of $250,000 for doing so. Mayweather used the “Love” logo to promote several crypto assets, including EMAX and failed to disclose that he was paid $200,000.
The SEC is increasingly cracking down on those who promote securities (even in the form of crypto assets) without disclosing their compensation. Celebrities like Paul Pierce, Kim Kardashian and Floyd Mayweather Jr. are proof that even celebrities cannot act outside the law and that regulators will act if necessary to protect investors from fraudulent practices. Investors are encouraged to conduct their own research before believing in the “investment opportunities” that celebrities promote, as they often encourage investments that can end in million-dollar losses.