Former NBA star Paul Pierce was called for a personal foul by The U.S. Securities and Exchange Commission for making misleading statements in favor of a crypto named EthereumMax.
The SEC alleges that this statement in his tweet: "I made more money with this crypto in the past month then I did with y’all in a year. TRUTH shall set u Free." was misleading.
You ask what was wrong with his tweet?
Well, according to the SEC, Pierce was being paid by EthereumMax. Pierce received money from the issuer in exchange for promoting the crypto asset security on his Twitter account, which at that time had about 4 million followers. For his promotion, he earned EthereumMax crypto worth about $244,116. The issue is that he never revealed he was being paid to promote the crypto asset.
Moreover, Pierce only received his EthereumMax crypto from the company two days before this tweet. At that time, his EthereumMax crypto asset that he received was worth $46,000, while he made more than 1 million dollars at ESPN the prior year. So he was clearly lying in the tweet in order to pump the crypto asset.
This violated Section 17(a) of the Securities Act which prohibits obtaining money or property by means of an untrue statement of a material fact or any omission of material facts necessary to make statements made not misleading in the offer or sale of securities. And section 17(b) of the Securities Act which prohibits anyone from promoting securities without properly disclosing the receipt and value of such consideration from an issuer.
Also keep in mind that at the same time pierce was selling off the securities.
"The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion," said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. "Investors are entitled to know whether a promotor of a security is unbiased, and Mr. Pierce failed to disclose this information."
Pierce agreed to pay a $1,115,000 penalty and approximately $240,000 in disgorgement and prejudgment interest. Pierce also agreed to not promote any crypto asset securities for three years.
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