SEC warns celebrities about crypto endorsements after fine

The Securities and Exchange Commission (SEC) is warning celebrities to be careful about endorsing cryptocurrencies.

The commission issued the warning on Friday (Feb. 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 had been paid to support the cryptocurrency ethereumMax (EMAX).

“This case is another reminder to celebrities: The law requires you to disclose to the public from whom and how much you are paid to promote investment in securities, and you cannot lie to investors when you present a security,” the SEC Chairman said Gary Gensler in a press release.

“When celebrities endorse investment opportunities, including securities in cryptoassets, investors should be careful to research whether the investments are right for them and they should know why celebrities are making these recommendations.”

According to the SEC, Pierce failed to disclose that he was paid more than $244,000 in EMAX to promote the currency on Twitter. That campaign, the commission said, included a tweeted screenshot showing an account with much larger holdings than Pierce actually owned.

Pierce agreed not to market cryptoassets for at least three years, the SEC said, noting that he neither admitted nor denied 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 accusing them of making misleading statements about EMAX.

The case was dismissed in December, although billionaire Kardashian was fined $1.3 million by the SEC.

This latest fine comes as a number of people face 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 alleges that the companies engaged in a campaign in 2021 to promote their own investments in FTX, adding “an aura of legitimacy” to a platform that would soon fall apart and turn the cryptocurrency sector upside down.

The FTX collapse has led to its own celebrity lawsuits. A class-action lawsuit filed shortly after the company filed for bankruptcy accuses Tom Brady, Gisele Bündchen, Stephen Curry, Larry David and other famous faces who appeared in FTX ads of promoting unregistered securities.