Numerous athletes and other celebrities who promoted various cryptocurrency brands are now facing civil lawsuits for their involvement in the crashing investments. Paul Pierce found himself in more hot water than others.
The U.S. Securities and Exchange Commission (SEC) announced on Friday it brought charges against Pierce for his touting of EMAX tokens and crypto asset securities offered and sold by EthereumMax on social media. According to the release, Pierce agreed to settle the charges and pay $1.409 million in penalties, disgorgement and interest.
In paying the settlement, Pierce neither admitted to nor denied the charges levied against him by the SEC.
Plenty of athletes have found themselves with issues relating to their involvement in cryptocurrency. Tom Brady and his then-wife Gisele Bundchen bought an equity stake in FTX and Stephen Curry signed a partnership that included an equity stake in FTX in 2021. FTX filed for bankruptcy in November 2022 and its founder, Sam Bankman-Fried, has been indicted on several charges. Brady, Curry, Shaquille O’Neal and others have been named in a class-action lawsuit over FTX’s collapse.
MORE: FTX collapse and sports connections, explained
Here’s what you need to know about Pierce’s charges.
Paul Pierce charges, explained
Pierce is one of many celebrities who promoted cryptocurrency, but there were several issues with his touting of the EthereumMax brand.
The SEC noted that he did not disclose that he was receiving payments for promoting the tokens and he shared misleading statements about his success with EMAX. The order noted he tweeted a screenshot of an accounting showing large holdings and profits, when in fact, his holdings were lower than the ones in the screenshot. He also shared a link to EthereumMax and gave instructions on how tokens could be purchased.
“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 the 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.”
Of the more than $1.4 million he paid to the SEC, Pierce was issued a penalty of $1.115 million and $240,000 in disgorgement and prejudgment interest. As part of the settlement, Pierce agreed not to promote crypto securities for three years.
The release said Pierce was paid $244,000 in EMAX tokens to promote the brand on social media.
“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 the release. “Investors are entitled to know whether a promotor of a security is unbiased, and Mr. Pierce failed to disclose this information.”
Pierce is not the only celebrity who has promoted EMAX and faced penalties for it. Kim Kardashian was charged by the SEC in October for promoting the brand without announcing that she had accepted $250,000 from the company. Pierce, Kardashian and Floyd Mayweather were each named in a since-dismissed lawsuit over their promotion of EMAX.
What is an EMAX token?
According to coinbase, an EMAX token “aims to bridge the emergence of community-driven tokens and known foundation crypto coins.” It is also labeled as a “cultural token that provides lifestyle perks with financial rewards and incentives to its holders.”
While Ethereum is a major cryptocurrency, EMAX is not actually connected to it, and is just built on top of the blockchain, per CoinDesk. The token claimed it would get owners “special access” to popular spots like restaurants, and said the tokens would deliver that value to owners. However, CoinDesk reported it could find no information on how to unlock the perks after buying a billion EMAX tokens for $5.