Boston Celtics legend and Basketball Hall of Fame player Paul Pierce has settled with the Securities and Exchange Commission (SEC) for $1.4 million over allegations that he unlawfully touted crypto securities.
Pierce was charged with wrongdoing over public statements about EthereumMax, or EMAX, the same crypto security product that the SEC charged Kim Kardashian with unlawfully touting.
According to the SEC, Pierce promoted EthereumMax tokens on Twitter but failed to disclose that he was paid for his promotion with EMAX tokens worth more than $244,000.
“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 Chairman 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.”
This is a bad beat by Pierce.
Pierced
He was paid approximately $244,000 in crypto tokens, but he has to come up with the cash for the SEC in United States dollars. In on the court earnings alone, Pierce made more than $195 million during his 20 seasons in the NBA. So he’s probably not hard up for cash. But if this crypto situation is any evidence of his investment track record, he might want to slowdown and work with professionals that deal with tangible currency.
Athletes and funny money
Pierce isn’t the only athlete to be on the wrong side of the cryptocurrency craze.
The collapse of cryptocurrency exchange FTX has thrust Tom Brady, Gisele Bündchen, and Stephen Curry into the spotlight in ways they’d rather not be.
These “trustworthy figures” lend their names to these assets that most people know nothing about and “sell” them to a captive audience that believes in the cult and power of celebrity.
Crypto could be a good investment, but an individual should know what they’re doing, and it should be a part of an overall diverse portfolio.
How Much Should Endorsers Know?
Pierce obviously had to settle his charges, but athletes and entertainers should be held to a certain standard when it comes to endorsing financial products. It’s a money grab for them, so their agents and business managers are happy to get their clients on board. But they need to disclose that they are paid spokespeople and not experts in the space.
The cryptocurrency market is regulated to a certain extent, but there is no central or unifying framework. Because of that regulatory looseness, crypto businesses can experiment and grow quickly. But that means potential bad business practices and excess risk taken on by the end user.
No matter who is endorsing one of these financial products, always remember who stands to gain with any business relationship.
A crypto company isn’t hiring a famous celebrity for no reason. They want to use their name to attract more customers because the company wants to make as much money as possible. Whether or not the customer ultimately makes money is not the business’ primary objective.
