The Securities and Exchange Commission (SEC) announced yesterday that it settled charges against actor Steven Seagal for not disclosing payments he received for promoting investments in an initial coin offering (ICO) by Bitcoiin2Gen (B2G).
SEC found that the 69-year-old actor failed to disclose the amount $250,000 in cash and $750,000 worth of B2G tokens he was promised to promote the digital assets back in 2018. The promotion included posts on his public social media profiles and a “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen” press release. The article included quotes from Seagal that he endorses and recommends the ICO “wholeheartedly”. The advertisement happened just six months after the SEC’s 2017 DAO Report warning that coins sold in ICOs may be securities.
Hollywood endorsements and promotion of cryptocurrency is nothing new but the SEC reminds that the anti-touting provisions of the federal securities laws mandate that any celebrity or other individual who promotes virtual assets that are a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion.
Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, commented:
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.
The SEC determined that Seagal was in violation of the anti-touting provisions of the federal securities laws. Seagal did not confirm, nor deny the allegations but he agreed to pay $157,000 in disgorgement, representing the promotional payments, prejudgment interest, and a $157,000 penalty. Seagal also agreed not to promote securities, digital or otherwise, for a period of three years.
The SEC reminds investors to be cautions with celebrity endorsements and promotion and to always conduct independent research of investment opportunities.