SEC Lets Steven Seagal Know He’s Not Above the Law

Actor Steven Seagal’s finances have come under siege as the Securities and Exchange Commission (SEC), out for justice, shows that when it comes to the Securities Act, no one is above the law.

Seagal has agreed to pay more than $300,000 to settle charges brought against him by the SEC that allege he violated the anti-touting provisions of the federal securities laws by failing to disclose payments he received for promoting an initial coin offering (ICO) conducted by cryptocurrency firm Bitcoiin2Gen.

The SEC said Seagal failed to disclose he was promised $250,000 in cash and $750,000 worth of Bitcoiin2Gen tokens in exchange for promoting the firm, which included posts on his Facebook and Twitter accounts. While neither admitting nor denying the SEC’s findings, Seagal agreed to pay $157,000 in disgorgement, which was the amount of his actual promotional payments, plus a $157,000 penalty and prejudgment interest of over $16,000. Seagal also agreed not to promote any securities for three years.

In February 2018, Bitcoiin2Gen said in a press release that Seagal, who the company referred to as a “Zen master” and “healer,” would endorse its ICO and be a brand ambassador for the company. The press release quoted Seagal as saying “I endorse this opportunity wholeheartedly … I am excited about the management, and especially about the secure blockchain, underlying mining technology, and safeguards.” The SEC said the press release did not disclose that Seagal was being paid for the promotion, which is required by law.

“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,” Kristina 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.”

The SEC also said Seagal’s promotion of the ICO occurred nearly four months after the regulator issued a public statement reminding market participants that 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,” and that a failure to disclose this information is a violation of the anti-touting provisions of the federal securities laws.

In March 2018, the New Jersey Bureau of Securities issued a cease-and-desist order against Bitcoiin2Gen for “fraudulently offering unregistered securities in violation of the Securities Law.” The order also said the company did not disclose “what expertise, if any, Steven Seagal has to ensure that the Bitcoiin investments are appropriate and in compliance with federal and state securities laws,” and that it didn’t disclose whether Seagal was being paid to promote the Bitcoiin investments.

The order also said that all of Bitcoiin’s developers, officers, managers, employees, controllers, and directors are anonymous. “Other than purporting that Bitcoiin’s executive offices are located in Asia and providing a contact name of ‘John Williams’ atjohn@bitcoiin.com, no additional contact information is available,” it said.