Unlike the vigilantes he played in his movies, Steven Seagal is not above the law — at least according to the Securities and Exchange Commission.
Seagal, the former action-movie star turned would-be musician, will pay more than $300,000 to settle charges that he failed to disclose he was being paid to promote a cryptocurrency investment, the SEC said Thursday.
Seagal, 67, did not tell his millions of social media followers that Bitcoiin2Gen had promised him $250,000 in cash and $750,000 worth of its tokens before promoting its initial coin offering on Twitter and Facebook, according to the SEC. Under the settlement, Seagal agreed to pay the SEC more than $330,000 in penalties and interest, including $157,000 that Bitcoiin2Gen had already paid him.
Celebs endorsing ICOs must now disclose if their social media posts are paid promotions.
When celebrities endorse things on social media, a lot of people tend to take their word for it. Now that some of them have also begun endorsing a controversial means of crowdfunding called “initial coin offering” or ICO, which was recently banned in China and South Korea, the US Securities and Exchange Commission has had to step in with a warning. Since ICOs are an unregulated means to raise money using cryptocurrencies, people could use them to sell products that don’t exist or to entice investors to sink their money into projects that will never materialize. That’s why SEC has decided to be on the lookout for celebrity ICO endorsements to protect potential investors.
The agency’s warning says:
“Any celebrity or other individual who promotes a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotion. A failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws. Persons making these endorsements may also be liable for potential violations of the anti-fraud provisions of the federal securities laws, for participating in an unregistered offer and sale of securities, and for acting as unregistered brokers.”
SEC’s warning comes after The New York Times published a piece on celebrities like Floyd Mayweather and Paris Hilton endorsing various ICOs. The famous boxer help a Miami-based ICO called Centra Tech raise $30 million. According to the publication, Centra Tech’s founders created a chief executive that doesn’t exist. In addition, despite promising a Visa or a Mastercard debit card to its backers that will supposedly allow them to spend their Centra coins anywhere, the company reportedly doesn’t have any kind of deal or partnership with either credit card company.
