The US Securities and Exchange Commission (SEC) has turned its radar on celebrities backing crypto projects.
The regulator announced on Friday that it has filed charges against retired NBA legend Paul Pierce for affiliating with EthereumMax (EMAX), a project aiming to create a scalable decentralized finance (DeFi) platform on Ethereum (ETH) to create network.
The SEC says Pierce touted EMAX token without disclosing the payment he received for the promotion and that he made “false and misleading advertising claims” about the highly volatile crypto-asset. According to the regulator, Pierce agreed to settle the charges and pay a $1.41 million fine.
SEC Chairman Gary Gensler took the opportunity to warn celebrities that they could be billed shillings for crypto projects if they don’t disclose advertising payments.
“This case is another reminder for celebrities: the law requires you to disclose to the public who pays you and how much to promote investment in securities, and you must not lie to investors when you promote a security. When celebrities are endorsing investment opportunities, including crypto-asset securities, investors should carefully research whether the investments are right for them and understand why celebrities are making these endorsements.”
In late 2022, a US judge dismissed a class action lawsuit in which numerous celebrities, including Pierce, had fraudulently promoted EthereumMax. However, the judge said in the case notes that the defendants may be able to amend their complaint and reinstate the lawsuit.
EMAX is worth $0.000000001015 at the time of writing, down over 99% from its all-time high.
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