U.S. securities regulators are bringing enforcement actions against celebrities who tout cryptoassets on social media without proper disclosure to investors.
The U.S. Securities and Exchange Commission (SEC) settled charges with famed ex-NBA player and broadcaster, Paul “The Truth” Pierce, who agreed to pay US$1.4 million to resolve the case.
According to the SEC, Pierce promoted EMAX tokens on Twitter without disclosing that he was paid with more than US$240,000 worth of the tokens for the posts.
The SEC also said he tweeted a misleading screenshot “showing large holdings and profits without disclosing that his own personal holdings were in fact much lower.”
Pierce agreed to settle the allegations without admitting or denying the SEC’s findings.
In doing so, Pierce agreed to pay a US$1.1-million penalty and approximately US$240,000 in disgorgement and prejudgment interest. He also agreed not to promote any cryptoasset securities for three years.
“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,” said SEC chair Gary Gensler in a release.
“When celebrities endorse investment opportunities, including cryptoasset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements,” he added.