Paul Pierce, was prosecuted by the SEC on February 17, 2023 for promoting and making false statements about EMAX tokens.
Through social media sites, Paul Pierce made and spread fraudulent and deceptive promotional remarks about EMAX, a coin that EthereumMax offered and sold.
Throughout the trial, Pierce omitted saying how much he was paid for the promotion. However, the SEC order discovered that he was compensated with EMAX tokens worth more than $244,000 in order to promote the cryptocurrency on Twitter.
Pierce chose to settle the allegations rather than plead guilty by paying the $1.409 million in disgorgement, fines, and interest that the court ordered him to pay. Paul Pierce posted harmful information about EMAX, including a screenshot of an account with several tokens and profits, according to the SEC order.
Pierce did not reveal the actual value of his account holdings, which were less than what was shown. His tweets contain a link to the EthereumMax website, where prospective investors could follow the instructions to buy EMAX coins.
According to the SEC decision, the former NBA star broke the federal securities laws’ anti-fraud and anti-touting provisions. The “Exchange Act Section 10(b) and Rule 10b-5,” which mandate that the promoter must disclose all material information, certification of reports, and financial statements by executive officers.
The clauses also address control person liability, incorrect and misleading information, and liabilities for security offerings. Several SEC employees are involved in the inquiry, including Jon A. Daniels, Pamela Sawhney, and Amanda Rios from the Enforcement Division’s Crypto Assets and Cyber Unit, who discovered sufficient evidence against Pierce.
Pierce did not acknowledge or deny the allegations, but he did agree to pay a $1,150,000 fine, $240,000 in disgorgement, and prejudgment interest. Also, he agreed not to run for office in the ensuing three years for any crypto asset-related securities.
Officers David Hirsch, Sylvester, and Tenreiro of the Crypto Assets and Cyber Section are still in charge of the investigations. In a statement, Gary Gensler, the chair of the Securities and Exchange Commission, warned famous people that they must disclose to the public the promoter of any security investment campaign they are running as well as how much money they are making from the campaign.
Additionally, celebrities have no right to mislead investors when providing remote security. He also cautioned investors against taking advantage of investment opportunities promoted by famous people, such as securities backed by cryptocurrency.
However, investors should perform due diligence on their investments and be aware of the factors that influence public figures’ endorsement decisions.
Gurbir S. Grewal, director of the SEC’s Division of Enforcement, stated that federal securities laws require anyone, including famous people, who promotes any crypto asset security to disclose the source, nature, and amount of compensation they received for the campaign.
The SEC representative also emphasized that investors have a right to be aware of the promoters’ biases. Pierce got into trouble because he withheld these facts.
