Martial artist and actor Steven Seagal has been charged for his role in promoting a 2018 initial coin offering (ICO).
The U.S. Securities and Exchange Commission (SEC) said in a statement on Thursday that Seagal did not disclose payments received in return for promoting the token launched by Bitcoiin2Gen (B2G) in February of that year.
The SEC said Seagal had not disclosed he was offered $250,000 in cash and $750,000 worth of B2G tokens in exchange for his services in promoting the ICO. These had included social media posts calling on his followers and fans not to “miss out” on the token investment, according to the SEC order. He also issued a press release titled, “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen.”
Seagal was further quoted in a B2G press release saying he backed the ICO “wholeheartedly.”
“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,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit. “Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation.”
Even at its launch, B2G had been compelled to issue a statement refuting accusations it was a pyramid scheme over its marketing practices. A month later, the Tennessee Department of Commerce and Insurance warned the state’s residents about the token project.
The SEC has previously advised celebrity endorsements of a token may be illegal if it is deemed a security. Promoters “must disclose the nature, scope, and amount of compensation received in exchange for the promotion,” the regulator says in today’s announcement.
The SEC orders states Seagal broke the anti-touting provisions of federal securities laws and has agreed to pay $157,000 in disgorgement without admitting or denying any wrongdoing.
The disgorgement covers the actor’s promotional payments, with prejudgment interest and a penalty of $157,000, according to the SEC. He’s also agreed not to promote any security for three years.
The SEC said the investigation is continuing.
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