SEC chair issues warning to celebrities promoting crypto amid latest enforcement action

The US Securities and Exchange Commission (SEC) has announced a $1.4 million settlement to former NBA player Paul Pierce for allegedly promoting the token project on social media.

In a Feb. 17 SEC announcement said Pierce advertised EthereumMax (EMAX) tokens through social media channels without disclosing that he was paid for the promotion and made “false and misleading statements” regarding the project. According to the SEC, promoters paid the former NBA star EMAX $244,000 in addition to posting messages on Twitter that allegedly contained misleading earnings information.

The financial regulator has previously targeted celebrities promoting EthereumMax tokens. In October 2022, the SEC announced a $1.2 million payout to Kim Kardashian for similar allegations Pierce faced — in this case, she did not disclose the $250,000 payment for posting a story on her Instagram promoting EMAX tokens.

“This case is another celebrity reminder that the law requires you to disclose to the public from whom and how much you are paid to promote investments in securities, and you cannot lie to investors when you advertise securities,” he said. SEC Chairman Gary Gensler. “When celebrities endorse investment opportunities, including crypto asset securities, investors need to be careful to find out if the investment is right for them, and they need to know why celebrities make such endorsements.”

As part of the settlement, Pierce paid the SEC a $1.115 million fine and approximately $240,000 in damages, and also agreed not to promote any crypto projects considered securities for three years. SEC Director of Enforcement Gurbir Grewal added:

“Investors have a right to know if the promoter of a security is impartial, and Mr. Pierce did not disclose that information.”

Breach: Circle Denies Rumors of Planned SEC Enforcement Action

The move by the SEC was the latest in what many critics called a “regulation by enforcement” approach to crypto projects that the agency considered securities. On February 9, the financial regulator announced that it had reached an agreement with Kraken in which the cryptocurrency exchange agreed to stop offering staking services or programs to US customers.

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