Actor Steven Seagal settles SEC case over undisclosed payments for touting cryptocurrency

The Securities and Exchange Commission said Thursday that it had settled previously undisclosed charges against faded action movie actor Steven Seagal for failing to disclose that he was being paid as he promoted a cryptocurrency investment.

An SEC order said Seagal, who agreed to pay $314,000 in disgorgement and penalties in a settlement, violated anti-touting provisions of federal securities laws during the very brief amount of time he spent as “brand ambassador” for the “Bitcoiin.”

The $157,000 that Seagal paid in disgorgement was approximately equivalent to the amount of money he was actually paid by the company.

The SEC said that Seagal, a 67-year-old martial arts expert who is currently residing in Moscow, Russia, “failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions” for an initial coin offering conducted by Bitcoiin2Gen, a cryptocurrency system.

Those promotions included public social media account posts that urged people not to “miss out” on Bitcoiin2Gen’s initial coin offering and “a press release titled ‘Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen,'” the SEC said.

That Feb. 13, 2018, press release said, “The inspiration of Bitcoiin2Gen is to make a superior or more advanced version of Original Bitcoin.”

Within days of the release, Seagal’s Twitter account, which had about 107,000 followers, began posting messages about the company and its imminent initial coin offering.

“Don’t miss out,” a Feb. 28, 2018, message on the Twitter account said, which was echoed the following day with “the same tout” on Seagal’s Facebook account, according to the SEC. The Facebook account had about 6.7 million followers.

The SEC said, “These promotions came six months after the SEC’s 2017 DAO Report warning that coins sold in ICOs may be securities.”

The agency also noted that under anti-touting provisions of federal securities laws, “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.”

Chris Nassif, a spokesman for Seagal, said in an email that that the actor had been “approached by certain individuals who said they were creating a digital currency and wanted him to be the ‘brand ambassador.’ “

“Mr. Seagal, after consultation with others (including counsel), believed the product was a digital currency,” Nassif said. “He then agreed to allow his likeness to be used to promote the product. He allowed others to post certain items on his social media accounts regarding the product. At some point, Mr. Seagal became concerned with the bona fides of the product and terminated the relationship.”

“Mr. Seagal was not involved in the creation of this product, nor did he have any prior relationship with the individuals who approached him,” the spokesman said. “To him, it was simply a case of someone paying a celebrity for the use of his image to promote a product.”

Nassif noted that the SEC did not charge Seagal with fraudulent conduct. He also said the actor “cooperated fully” with the investigation “and this matter is now behind him.”

“He looks forward to continuing his life’s work as an actor, musician, martial artist and diplomat.”

Seagal’s stint as a promoter for Bitcoiin2Gen was short-lived.

On March 7, 2018, the New Jersey Bureau of Securities issued a cease-and-desist order against BitCoiin2Gen, which said the firm is “fraudulently offering unregistered securities in violation of the Securities Law.”

That order noted that Bitcoiin2Gen’s press release about Seagal did not disclose the nature, scope or amount of compensation paid to Seagal for his promotion of the investment.

A press release issued by Bitcoiin2Gen just six weeks after Seagal’s involvement in the company was announced said he was no longer serving as brand ambassador.

Article source: https://www.cnbc.com/2020/02/27/steven-seagal-charged-over-cryptocurrency-offering-payments.html