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The Securities and Exchange Commission (SEC) has charged former NBA playerPaul Piercefor touting EMAX tokens on social mediawithout disclosingpayment he received for the promotion and for allegedly making false and misleading statements about the crypto asset.
The Pierce Case:The SEC on Friday announced that Pierce has agreed to settle the charges and will pay $1.409 million in penalties, disgorgementand interest.
According to the SEC, Pierce failed to disclose that he was paid over $244,000 in EMAX tokens to promote the tokens on Twitter.
The agency stated that Pierce tweeted misleading statements related to EMAX, including sharing a screenshot of an account showing large holdings and profits without disclosing that his personal holdings were much lower.
One of Pierces tweetscontained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.
Gensler On Disclosure: SEC Chair Gary Gensler has highlighted the importance of full disclosure when it comes to promoting investment opportunities, particularly crypto asset securities.
"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 cant lie to investors when you tout a security," Gensler said in a statement.
"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."
In addition, Gurbir S. Grewal, Director of the SECs Division of Enforcement, emphasizedthe federal securities laws are clear and that investors are entitled to know whether a promoter of a security is unbiased.
"Mr. Pierce failed to disclose this information," he said.
Also read:USDC Unaffected By Recent Regulatory Action Against Stablecoins, Says Bernstein
The Settlement: Pierce violated the anti-touting and antifraud provisions of the federal securities laws, as per the SECs order.
He has agreed to pay a penalty of $1,115,000 and approximately $240,000 in disgorgement and prejudgment interest. Moreover, Pierce has agreed not to promote any crypto asset securities for three years.
Gensler has released a video warning investors not to make investment decisions solely based on recommendations from celebrities or influencers, urging caution in celebrity-backed crypto asset offerings.
In October, the SEC brought charges against Kim Kardashian for promoting a crypto asset security offered and sold by EthereumMax on social media without disclosing the compensation she received for the endorsement.
In order to settle the matter, Kardashian agreed to pay $1.26 million in fines, disgorgementand interest, as well as to assist with the Commission's ongoing investigation.
Next:Bank Of Japan To Test Technical Feasibility Of Digital Yen With Private Businesses
Photo by Keith Allison via Wikimedia.
