SEC dunks on Paul Pierce for crypto shilling

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The U.S. Securities and Exchange Commission announced on Friday that it had reached a settlement with former NBA superstar Paul Pierce related to his role touting EthereumMax crypto tokens without disclosing payments. Pierce agreed to pay $1.409 million.

The SEC, led by Gary Gensler, has aggressively pursued crypto-related enforcement actions, including targeting celebrities who promoted cryptocurrency projects during the sector’s historic bull run of 2021 and early 2022. In October 2023, the SEC reached a similar settlement with Kim Kardashian for her involvement with the same EthereumMax token.

“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,” Gensler in a statement.  

EthereumMax, or EMAX, is a crypto token built on the Ethereum blockchain that claimed to be building a decentralized ecosystem. Instead, it partnered with prominent celebrities, including Pierce, Kardashian, and boxer Floyd Mayweather, to promote the project on social media and through other collaborations. EMAX was accepted as payment for Mayweather’s fight against YouTuber Logan Paul in 2021.  

After the SEC announced charges against Kardashian for promoting EMAX without disclosing to her followers she received payment, there was widespread speculation as to whether other celebrities would be implicated as well. Pierce was one of its most vocal boosters, tweeting in May 2021 that he made more money from EMAX in the past month than he had from ESPN the entire year.  

“TRUTH shall set u Free,” he tweeted, making a pun on his NBA nickname.  

Despite the participation of celebrities, EMAX did not perform well, even as cryptocurrency markets soared at the time. Since reaching a high of $0.00000092 in May 2021, it decreased by 99% by the end of 2022, leaving any users who had followed celebrities’ advice to be holding the proverbial bag.  

“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,” Gurbir S. Grewal, director of the SEC’s Division of Enforcement, said in a statement.  

The SEC found that Pierce had violated the anti-touting and antifraud provisions of the federal securities laws. Pierce, in agreeing to pay the $1.409 million, neither admitted nor denied the SEC’s findings.  

Despite the recent enforcement actions by the SEC, many in the crypto industry have criticized the agency for mainly targeting projects that have long since died. On Thursday, the SEC brought charges against Do Kwon, the founder of the failed Terraform Labs. The collapse of the company’s Terra USD algorithmic stablecoin in May 2022 jumpstarted the current Crypto Winter.

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