The U.S. Securities and Exchange Commission (SEC) has its radar locked on celebrities endorsing crypto projects.
The regulator announced on Friday that it brought charges against retired NBA legend Paul Pierce for plugging EthereumMax (EMAX), a project that aims to create a scalable decentralized finance (DeFi) platform on the Ethereum (ETH) network.
The SEC says Pierce touted EMAX tokens without disclosing the payment he received for the promotion, and that he made “false and misleading promotional statements” about the highly volatile crypto asset. Pierce agreed to settle the charges and pay a $1.41 million fine, according to the regulator.
SEC Chair Gary Gensler took the opportunity to warn celebrities that they could be charged for shilling for crypto projects if they don’t disclose promotional payments.
“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. 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.”
At the end of 2022, a US judge threw out a class action lawsuit that alleged numerous celebrities, including Pierce, fraudulently promoted EthereumMax. The judge, however, said in the case notes that the defendants could potentially amend their complaint and revive the lawsuit.
EMAX is worth $0.000000001015 at time of writing, down over 99% from its all-time high.
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