Action film star has been fined for unlawfully touting cryptocurrencies and acting as the brand ambassador for a controversial initial coin offering (ICO), called Bitcoiin2Gen (B2G).
The Hollywood star, 66, has agreed to pay a combined $314,000 in fines and penalties, the Securities and Exchange Commission (SEC) said in a statement on Thursday. He neither admitted nor denied the regulator’s charges, but agreed not to promote any securities, digital or otherwise, for three years.
According to the SEC, Seagal failed to disclose payments from the ICO that was accused of constituting pyramid schemes, highlighting the secretive nature of his involvement in Bitcoiin2Gen. Specifically, he received $250,000 in cash and $750,000 worth of B2G tokens— which were priced at $5 each during the token sale — in exchange for his promotions.
The SEC added that anyone should comply with federal securities laws that mandate anyone promoting a sale disclose their financial relationship to the company.
Promoters must reveal whether they had been paid to do so
Seagal called the offer a game changer and encouraged his followers on social media not to “miss out” on Bitcoiin2Gen’s ICO. The promotions included a press release titled “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen,” which projected that B2G tokens will be worth $350 in a few months, netting investors a cool 8000 percent profit.
“These investors were entitled to know about payments Seagal received or was promised to endorse this investment so they could decide whether he may be biased, Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit.
Seagal’s promotion followed a SEC’s warning in 2017 that coins sold as ICOs may be classed as securities and also warned about celebrity endorsements of such schemes.
The New Jersey securities regulator also slapped the Steven Seagal-backed initial coin offering with a cease and desist order in 2018, alleging that it was fraudulently selling unregistered securities
At the time ICO operators, and sometimes ‘scammers,’ had been trying to and cryptocurrency enthusiasts to grab money from investors in the hot market. The trend of celebrity endorsements even forced the US Securities and Exchange Commission (SEC) to release an official statement the nature, scope, and amount of compensation received in exchange for the promotion.