The SEC Comes for "The Truth"

SEC Charges NBA Hall of Famer Paul Pierce for Unlawfully Touting and Making Misleading Statements about Crypto Security

The Securities and Exchange Commission today announced charges against former NBA player Paul Pierce for touting EMAX tokens, crypto asset securities offered and sold by EthereumMax, 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. Pierce agreed to settle the charges and pay $1.409 million in penalties, disgorgement, and interest.

The SEC’s order finds that Pierce failed to disclose that he was paid more than $244,000 worth of EMAX tokens to promote the tokens on Twitter. The SEC’s order also finds that Pierce tweeted misleading statements related to EMAX, including 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. In addition, one of Pierce’s tweets contained a link to the EthereumMax website, which provided instructions for potential investors to purchase EMAX tokens.

Coinbase just wants the SEC to follow the rule of law

One particular inconsistency Grewal points out is how the Securities and Exchange Commission’s request for crypto exchanges to register as national securities exchanges clashes with Coinbase’s explicit policy of not listing securities:

“For there to be no distinction drawn between the products that are securities and the products that aren’t, is effectively saying that we would have to agree that the rule of law doesn’t matter and that even though Congress limited the SEC’s jurisdiction to securities and securities alone, we should come in and register anyway,” Grewal said.

Government Cracks Down on Crypto Industry With Flurry of Actions

The enforcement wave has caused outrage and anxiety in the crypto industry. Some industry advocates have labeled the government efforts “Operation Choke Point 2.0,” alluding to a law enforcement campaign in the 2010s to prevent banks from working with certain businesses.

One industry lawyer said he was advising executives to prepare for as long as five years of high-stakes, expensive litigation with the government. Crypto companies have privately traded tips on which law firms to hire to handle government lawsuits, said the lawyer, who requested anonymity to describe sensitive legal discussions.

How pervasive is corporate fraud?We provide a lower-bound estimate of the undetected share of corporate fraud. To identify the hidden part of the “iceberg,” we exploit Arthur Andersen’s demise, which triggered added scrutiny on Arthur Andersen’s former clients and thereby increased the detection likelihood of preexisting frauds. Our evidence suggests that in normal times only one-third of corporate frauds are detected. We estimate that on average 10% of large publicly traded firms are committing securities fraud every year, with a 95% confidence interval of 7%-14%. Combining fraud pervasiveness with existing estimates of the costs of detected and undetected fraud, we estimate that corporate fraud destroys 1.6% of equity value each year, equal to $830 billion in 2021.

Going Private Again Is All the Rage Among Newly Public Companies

A growing number of newly public companies are racing back to private ownership after discovering that an IPO isn’t always all it’s cracked up to be.

Of the hundreds of companies that went public in the boom years of 2020 and 2021, 10 have already agreed to sell themselves to private-equity firms, according to Dealogic. Of those that went public in 2018 or 2019, only eight have gone private in the ensuing years.

Driving the decision to opt for a buyout over remaining public in many cases is the dismal performance of the 2020-21 class of initial public offerings, the majority of which now trade below their debut prices.