Actor Steven Seagal is in hot water with the SEC and has been charged because of a failure to disclose payments he received tied to Bitcoiin2Gen or B2G. The payments he received were in return for promotion of the ICO (initial coin offering) by B2G and were in the amounts of $250,000 in cash and $750,000 in B2G tokens. In return he would promote them n his social media accounts and encourage the public to not miss out, and Seagal was also included in a press release from B2G with the headline “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen.” The SEC says that any celebrity or other individuals who promote a virtual token or coin that is a security (which they say coins sold in ICO’s may be) must also disclose the nature, scope, and amount of compensation received for the promotion.
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Evidently Seagal did not disclose this information, and the SEC says that the lack of that information does not allow the public to discern whether or not he’s biased in his promotion of the product.
“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.”
Seagal did not admit or deny the SEC’s findings but agreed to pay $157,000 in disgorgement plus prejudgement interest, as well as a $157,000 penalty.
Seagal also agreed to not promote any securities, including digital or otherwise, for three years.
The SEC then released a bulletin that warned those looking to invest to do their due diligence.
“Even if the celebrity endorsement and the investment opportunity are genuine, the investment may not be a good one for you. Before investing, always do your research, including these three steps:
Check out the background, including registration or license status, of anyone recommending or selling an investment, using the search tool on Investor.gov;
Learn about the company’s finances, organization, and business prospects by carefully reading any prospectus and the company’s latest financial reports, which may be available through the SEC’s EDGAR database; and
Consider the investment’s potential costs and fees, risks, and benefits in light of your own investment goals, risk tolerance, investment horizon, net worth, existing investments and assets, debt, and tax considerations.”
