NBA Star Fined $1.4M by SEC for Alleged Social Media Token Promotion
Former NBA player Paul Pierce has agreed to pay a $1.4-million settlement to the United States Securities and Exchange Commission (SEC) for promoting EthereumMax (EMAX) tokens on social media without disclosing that he received payment for the promotion.
False and misleading statements
The SEC accused Pierce of posting “false and misleading statements” regarding the project, and allegedly accepting $244,000 worth of EMAX tokens for his promotion. Pierce’s settlement follows the SEC’s previous settlement with Kim Kardashian for similar charges. The reality star failed to disclose a $250,000 payment for promoting EMAX tokens on her Instagram.
SEC Chair Gary Gensler has reminded celebrities that they must disclose to the public how much they receive for promoting investment in securities, and not mislead investors.
The regulatory agency has been cracking down on celebrities promoting crypto projects without disclosing that they received payment for their endorsements.
Enforcement actions against crypto projects considered securities
The move by the SEC to settle with Pierce is the latest example of what many have called a “regulation by enforcement” approach to crypto projects. Critics believe that the SEC should provide clearer guidelines for the regulation of crypto assets, rather than relying on enforcement actions to establish boundaries.
In a separate announcement on Feb. 9, the financial regulator revealed that it had reached a settlement with Kraken, a crypto exchange, to stop offering staking services or programs to U.S. clients.
The SEC’s recent enforcement actions against crypto projects considered securities suggest that the regulatory agency is stepping up its scrutiny of the sector, and indicates that crypto companies need to pay close attention to the regulations governing their activities.