The ongoing regulatory wrestling match between the United States Securities Exchange Commission (SEC) and the world of cryptocurrency took an unusual turn earlier this month when the SEC charged actor and martial artist Steven Seagal in connection with his role in promoting an initial coin offering (ICO).
I’ll wait until you’re done laughing.
I wouldn’t get involved in an ICO. It’s too risky of a venture for me, but you may have a deeper acceptance of risk than I do, and if you’re so inclined, pay attention to the fine print. Here’s a recent example of people who haven’t been protecting their necks.
He was involved in promoting a token launched by a company called Bitcoiin2Gen (B2G) in February of 2018. I realize it’s something of a cheapshot to suggest, but there are three obvious red flags involved in this proposed ICO. The first is Steven Seagal himself. Seagal was promised $250,000 in cash and $750,000 in cryptocurrency from the company in exchange for endorsing its ICO. The esteemed star of Hard to Kill and too many direct-to-video movies to count has never seen a bullshit idea he didn’t like.
Just because they’ve got a celebrity endorsement, doesn’t mean it’s a legit opportunity. Look at the fine print.
Steven Seagal’s Facebook and Twitter accounts posted several times about the ICO, calling him the “worldwide ambassador” for the company, according to the SEC. But he failed to note a conflict of interest, which is a big faux pas with the SEC.
“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. Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation,” said Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit.
The second red flag is that at the start of the ICO B2G had to be compelled to issue a statement refuting accusations that the marketing operation wasn’t a pyramid scheme. A month later, the Tennessee Department of Commerce and Insurance issued a warning to the state’s residents about the project.
If you’re going to get involved in any investment, legit or quasi-legit, do some background research.
In a March 26 statement, the group behind the group said that both Seagal and the “founders” of the project are exiting in light of the token sale’s completion.
The post stated:
“As Bitcoiin goes through the conversion phase from token to mineable coin we wish to advise that Bitcoiin will join the likes of the original Bitcoin and become a truly open source. Therefore a big thank you to the Founders and to our Brand Ambassador whom we wish all the best in their future endeavors. However, from this point on Bitcoiin will function within its ecosystem and become a genuinely anonymous cryptocurrency with no individual or individuals having control over the entity!”
Except it doesn’t. It’s not mineable. It’s collapsed entirely and there’s no money. Steven Seagal agreed to pay $314,000 over two separate charges. In addition, Seagal agreed not to promote any securities, digital or otherwise, for three years. I’m curious whether or not Steven Seagal’s $750,000 in cryptocurrency is in Bitcoiin, because that would at least put a fine bow on this debacle.
The third red flag is that it isn’t entirely clear who these people are behind the project, though BehindMLM, a blog that covers multi-level marketing scams, has profiled some of the efforts to promote the token sale following a cease-and-desist order in New Jersey.
To date nobody has been held accountable for Bitcoiin’s collapse. Losses have been pegged at over $75 million dollars.
This is why we can’t have nice things.