The Securities and Exchange Commission announced Thursday that it settled charges against actor Steven Seagal for failing to disclose payments for promotional work. The action star was charged with promoting an investment in an initial coin offering (ICO) conducted by Bitcoiin2Gen (B2G).
The SEC alleges that Seagal failed to disclose that he was promised $250,000 in cash and $750,000 worth of B2G tokens for his work, which included posts on social media encouraging the public in February 2018 not to "miss out" on Bitcoiin2Gen's ICO, as well as a press release titled "Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen."
In that press release, Sagal stating that he endorsed the ICO "wholeheartedly." The company said Seagal was aligned with the company's mission because "what he does in his life is about leading people into contemplation to wake them up and enlighten them in some manner."
The promotions came six months after the SEC's 2017 DAO Report warning that coins sold in ICOs may be securities.
Bitcoiin2Gen received a cease-and-desist order from the state of New Jersey in March 2018 for "fraudulently offering unregistered securities in violation of the Securities Law." Seagal's tenure as its brand ambassador ended later that month, Coindesk reports.
Anti-touting provisions of federal securities laws state that any celebrity or other person 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.
"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," Krsitina LIttman, Chief of the SEC Enforcement Division's Cyber Unit, said in a statement. "Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation."0comments
Without admitting or denying the SEC's findings, Seagal agreed to pay back $157,000 the amount he actually received, plus more than $16,000 in interest, and a fine of another $157,000, the government order says. He also agreed not to promote any securities, digital or otherwise, for three years.
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