SEC Warns Celebs Of Crypto Endorsements After Settling With Paul Pierce Over EMax Promotion; Is Mayweather Next?

The U.S. Securities and Exchange Commission (SEC), after filing charges against Kim Kardashian for promoting Ethereum Max and failing to disclose the payment she received from the crypto business, announced that NBA Hall of Famer Paul Pierce settled with the financial regulator after he faced similar charges.

After its crackdown against stablecoin issued by various centralized crypto exchange platforms last week, the SEC announced that it filed charges against NBA's Pierce.

In a statement, SEC chairman Gary Gensler noted that the financial regulator's most recent action is "yet another reminder to celebrities" to declare the payment they received for promoting investments.

Gensler suggested that Pierce's case is a reminder that the law requires celebrities to disclose when and how much they are paid to promote investment in securities.

"You can't lie to investors when you tout a security," the chairman said, adding, "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 SEC charged NBA Hall of Famer Paul Pierce with making false misleading promotional statements about Ethereum Max. It is a decentralized financial cryptocurrency hosted on the Ethereum blockchain, which later turned out to be a "rug pull," a colloquial term for a crypto scam where fraudsters heavily promote a project to attract funding and then quickly run off with investors' investments.

The SEC charges alleged that Pierce didn't disclose a payment of more than $244,000 of EMAX, the native token of the Ethereum Max crypto, for promoting the business in his social media accounts, including Twitter.

While the NBA superstar did not admit or deny the charges, he agreed to pay a whopping $1,115,000 penalty and $240,000 in disgorgement and interest, the SEC revealed.

Kardashian, Pierce and boxing superstar Mayweather Jr. were among the top endorsers of EMAX who promoted the crypto between May and June 2021, and many think after Pierce, the boxing legend could be next.

"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," said Gurbir S. Grewal, Director of the SEC's Division of Enforcement. He added that "investors are entitled to know whether a promotor of security is unbiased, and Mr. Pierce failed to disclose this information."

Kardashian, who faced similar charges from the SEC, agreed to pay $1.26 million in October last year to settle the charges.