Hollywood superstar Steven Seagal has lost his fight against financial regulators for failing to tell fans he was paid for urging them not to miss a cryptocurrency initial offering.
Seagal promoted Bitcoiin2Gen’s ICO on social media to thousands of fans but forget to mention he was picking up $250,000 cash and $750,000 in Bitcoiin2Gen tokens for doing so.
Now, investment watchdog the US Securities and Exchange Commission (SEC) has slapped his wrist and fined Seagal $330,000 on charges of keeping his links with the ICO secret.
Seagal, who starred in blockbuster action movies Above the Law, The Patriot and Under Siege, used social media posts to encourage fans and investors not to miss Bitcoiin2Gen’s initial coin offering.
A news release at the time even boasted Seagal, 67, was a Zen master and brand ambassador for Bitcoiin2Gen.
Federal securities rules demand celebrities must declare any payments they receive in exchange for recommending investments.
Seagal also told his followers that he endorsed the ICO ‘wholeheartedly’.
The actor has agreed to pay the fine in an out of court settlement. He has also promised not to promote any investments for three years.
“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,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation.”
Don’t invest because someone famous says so
The SEC has published guidance warning investors to be wary of celebrity endorsements.
“Celebrities, from movie stars to professional athletes, can be found on TV, radio, and social media endorsing a wide variety of products and services – sometimes even including investment opportunities,” says the SEC.
“But a celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors. It is never a good idea to make an investment decision just because someone famous says a product or service is a good investment.
“Celebrities, like anyone else, can be lured into participating (even unknowingly) in a fraudulent scheme. Also, celebrities are sometimes linked to products or services without their consent so the celebrity may not even have endorsed the investment.“