Former NBA player to pay $1.4 million to settle SEC crypto fraud charge

Feb. 17 (UPI) -- The U.S. Securities and Exchange Commission Friday charged former NBA player Paul Pierce for touting EMAX cryptocurrency tokens without disclosing he was paid to do it. The SEC also said he made false and misleading statements about cryptocurrency.

According to the SEC, Pierce failed to disclose he was paid $244,000 in EMAX tokens to promote them on Twitter. Pierce agreed to settle the charges and pay $1.409 million in penalties, disgorgement and interest.

"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 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 SEC said one of the misleading actions Pierce took while being paid to promote EMAX tokens is tweeting a screenshot of "an account showing large holdings and profits without disclosing that his own personal holdings were in fact much lower than those in the screenshot."

The SEC said it found that Pierce violated the anti-touting and antifraud provisions of federal securities laws.

Pierce agreed to pay to settle without admitting or denying the charges, according to the SEC. But he agreed not to promote any crypto assets for three years.

Cryptocurrency fraud is growing worldwide. In January Sam Bankman-Fried pleaded not guilty to various fraud charges in the collapse of crypto exchange FTX.

The Securities Commission of the Bahamas said in December it had taken possession of $3.5 billion worth of cryptocurrency from the collapsed FTX.

On Thursday, the SEC announced a lawsuit against Do Kwon, creator of the crypto blockchain protocol Terra for allegedly orchestrating a $40 billion securities fraud scheme.

Earlier this month a Puerto Rican faced charges of a $110 million cryptocurrency fraud involving manipulation of the crypto exchange Mango Markets.