SEC Delivers Blow to Steven Seagal's Crypto Promos

From approximately Feb. 12, 2018, through March 6, 2018, Seagal touted on social media a security that was being offered and sold in the B2G ICO without disclosing that the issuer was paying him for the promotions.

During the relevant period, Seagal had approximately 107,000 Twitter followers and 6.7 million Facebook followers. He promoted on his Twitter and Facebook accounts a security being sold through an ICO, allowed his likeness to be used on the ICO issuer's official website and marketing materials, and participated in a webinar with potential investors in the ICO in exchange for payments from the ICO issuer, the SEC order states.

Seagal's 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.

"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, in a statement. "Celebrities are not allowed to use their social media influence to tout securities without appropriately disclosing their compensation."

The SEC's order finds that Seagal violated the anti-touting provisions of the federal securities laws.

Without admitting or denying the SEC's findings, Seagal agreed to pay $157,000 in disgorgement, which represents his actual promotional payments, plus prejudgment interest, and a $157,000 penalty. In addition, Seagal agreed not to promote any securities, digital or otherwise, for three years.