Yesterday, the SEC announced that it had instituted a settled enforcement action against actor, musician, environmentalist, martial arts master & Russian special envoy Steven Seagal for allegedly violating the anti-touting provisions of the Securities Act in connection with a digital asset offering. Here’s an excerpt from the SEC’s press release:
The SEC’s order finds that Seagal failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions, which included posts on his public social media accounts encouraging the public not to “miss out” on Bitcoiin2Gen’s ICO and a press release titled “Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen.” A Bitcoiin2Gen press release also included a quotation from Seagal stating that he endorsed the ICO “wholeheartedly.”
These promotions came six months after the SEC’s 2017 DAO Report warning that coins sold in ICOs may be securities. The SEC has also advised that, in accordance with the anti-touting provisions of the 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.
According to the SEC’s order, in addition to consenting to a C&D on a neither admit nor deny basis, Vladimir Putin’s BFF agreed to disgorge all of the $157,000 in promotional payments that he received (plus interest) and to pay a $157,000 penalty. He also agreed not to promote any securities for three years.
If it’s any consolation to Louisiana’s most Googled d-lister, he’s not the first celebrity to run afoul of Section 17(b) of the Securities Act for touting a digital deal. Back in 2018, boxer Floyd Mayweather & music impresario DJ Khaled were tagged by the SEC for the same conduct.
-John Jenkins, TheCorporateCounsel.net February 28, 2020