After $1.4M Fine, Sec Warns Celebrities Against Crypto Endorsements

The Securities and Exchange Commission (SEC) cautions celebrities from supporting cryptocurrencies.

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The commission issued the warning on Friday (Feb. 17), following the announcement that Paul Pierce, a former Boston Celtics player, had agreed to pay a $1.4 million fine for failing to declare that he had been compensated to support the cryptocurrency ethereumMax (EMAX).

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"This case is just another warning to celebrities: The law would require you to declare to the public whom and how much you are receiving paid to encourage investment in securities, and you cannot mislead investors when you praise a product," SEC Chair Gary Gensler stated in a news release.

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Investors should be careful to examine whether the investments are suited for them and they should know why celebrities are endorsing investment options, including crypto-asset securities.

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Pierce allegedly neglected to declare that he received more than $244,000 in EMAX as payment for promoting the currency on Twitter. The commission claimed the marketing used a tweeted screenshot of an account with substantially more assets than Pierce actually had.

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The SEC noted that Pierce did not confirm or reject the conclusions of the commission, but did promise not to market crypto assets for at least three years.

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Together with Floyd Mayweather and Kim Kardashian, Pierce was one of three celebrities who were mentioned in a class-action lawsuit last year that claimed they had misrepresented EMAX.

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Although millionaire Kardashian received a $1.3 million SEC penalty, the lawsuit was dismissed in December.

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A number of people are currently being sued for their roles in marketing the insolvent cryptocurrency exchange FTX, which brings us to this most recent fine.

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Investors in the company sued a number of investment companies, including Sequoia Capital, Thoma Bravo, and Paradigm, last week for endorsing FTX.

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The lawsuit asserts that in 2021, the firms participated in a campaign to publicize their own investments in FTX, lending "an aura of respectability" to a platform that would shortly collapse and completely alter the cryptocurrency industry.

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Celebrity lawsuits related to the FTX collapse have also been filed. A class-action lawsuit alleges Tom Brady, Gisele Bündchen, Stephen Curry, Larry David, and other well-known figures who appeared in FTX advertisements endorsing unregistered stocks. The lawsuit was filed shortly after the business declared bankruptcy.