The U.S Securities and Exchange Commission (SEC) is warning celebrities to be careful about endorsing cryptocurrencies.
The commission issued that warning on February 17, after announcing that Paul Pierce, a former Boston Celtics star, had agreed to pay a $1.4 million penalty for failing to disclose that he’d been paid to endorse the cryptocurrency ethereumMax (EMAX).
“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,” SEC Chair Gary Gensler said in a news release.
“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.”
According to the SEC, Pierce failed to disclose that he was paid more than $244,000 worth in EMAX to promote the currency on Twitter. That promotion, the commission said, included a tweeted screenshot showing an account with much larger holdings than Pierce actually owned.
Pierce agreed not to promote crypto assets for at least three years, the SEC said, noting that he did not admit or deny the commission’s findings.
Pierce was part of a trio of celebrities — along with Kim Kardashian and Floyd Mayweather — named last year in a class-action lawsuit that accused them of making misleading statements about EMAX.
The suit was dismissed in December, although billionaire Kardashian was fined $1.3 million by the SEC.
This latest fine comes as a number of people are facing lawsuits for their role in promoting the bankrupt cryptocurrency exchange FTX.
Last week a group of the company’s investors sued a group of investment firms — including Sequoia Capital, Thoma Bravo and Paradigm — for promoting FTX.
The suit claims the companies took part in a campaign in 2021 to promote their own investments in FTX, adding “an air of legitimacy” to a platform that would soon fall apart and turn the cryptocurrency sector on its head.
The FTX collapse has led to its own celebrity lawsuits. A class-action suit filed soon after the company went bankrupt accuses Tom Brady, Gisele Bündchen, Stephen Curry, Larry David and other famous faces who appeared in FTX ads of promoting unregistered securities.
Meanwhile, Nishad Singh, an FTX executive will reportedly plead guilty in the fraud case against the company’s founder