SEC Charges Celtics Legend Paul Pierce With Failing to Disclose He Was Paid to Promote Crypto

The federal Securities and Exchange Commission announced charges against Celtics legend Paul Pierce on Friday, saying he failed to disclose that he was paid to promote a cryptocurrency company.

The SEC alleges that the NBA Hall of Famer failed to disclose that he was paid more than $244,000 in EMAX tokens to promote the tokens offered and sold by EthereumMax on Twitter. They also said he tweeted "misleading statements" related to EMAX, including a screenshot of an account showing large holdings and profits without disclosing that his own personal holdings were actually much lower than what he displayed. One of his tweets also contained a link to the EthereumMax website with instructions for potential investors to purchase EMAX tokens.

"@espn I don't need you," Pierce wrote in a May 2021 Tweet. "I got @ethereum_max I made more money with this crypto in the past month then I did with y'all in a year."

The SEC said Pierce's gross compensation from ESPN was over $1 million in 2020.

Pierce agreed to settle the charges and pay $1.1 million penalty and approximately $240,000 in disgorgement and prejudgment interest, the SEC said. He also agreed not to promote any crypto asset securities for three years.

EMAX is the same crypto security product the SEC charged Kim Kardashian with unlawfully touting. She settled with the SEC in October for $1.2 million over her alleged touting of EMAX, which included a now infamous line, "Are you guys into crypto????"

"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," SEC Chair Gary Gensler said in a statement. "When celebrities endorse investment opportunities, including crypto asset securities, investors should be careful to research if the investments are right for them, and they should know why celebrities are making those endorsements."

"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," added 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."

Today we announced charges against former NBA player Paul Pierce for touting EMAX tokens on social media without disclosing the payment he received for the promotion and for making false and misleading promotional statements about the same crypto asset.

— U.S. Securities and Exchange Commission (@SECGov) February 17, 2023

Representatives for Pierce did not immediately respond to a request for comment from CNBC.

The SEC has gotten more aggressive with its enforcement action in the crypto space. On Thursday, the regulator charged stablecoin issuer Terraform and CEO Do Kwon with fraud.

Earlier this week, the SEC proposed changes to federal custody regulation that could materially impact the way crypto exchanges are able to custody certain assets. Days earlier, crypto exchange Kraken settled with the SEC over its staking service. And in January, the SEC unveiled charges against crypto lender Genesis and crypto exchange Gemini over the alleged unregistered offering and sale of securities.

CNBC contributed to this report.