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New Jersey Issues Cease-and-Desist to ICO Endorsed by Steven Seagal

The U.S. state of New Jersey has issued a cease-and-desist order to an initial coin offering (ICO) endorsed by film actor Steven Seagal.

In an order entered on March 7, the New Jersey Bureau of Securities alleged that Bitcoiin is selling unregistered securities to New Jersey residents. The document highlights the lack of concrete information about those behind the project, stating that “Bitcoiin’s developers, officers, managers, employees, controllers, and/or directors are anonymous,” though it highlights the endorsement by Seagal.

“Bitcoiin has never been registered to sell securities in the State of New Jersey,” officials wrote.

The project made headlines last month after Seagal, best known for his action film roles in the 1990s, publicly endorsed the cryptocurrency offering through his official Twitter account – a notable development given the string of endorsements seen last year and the subsequent warning by the U.S. Securities and Exchange Commission (SEC) regarding celebrity involvement in token sales.

The Bitcoiin ICO had sparked accusations that it was a pyramid scheme seeking to mislead investors through the close name association with bitcoin – allegations that Bitcoiin later rebuked in a public statement.

Notably, New Jersey’s cease-and-desist order highlight’s Seagal’s role as a brand ambassador, noting a disclaimer on its website that states the actor holds no ownership stake in the project. That said, officials drew issue with the lack of information regarding the compensation he may have received.

“The Bitcoiin Websites do 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,” the order explains. “Additionally, there are no disclosures as to the nature, scope, and amount of compensation paid by Bitcoiin in exchange for Steven Seagal’s promotion of the Bitcoiin investments.”

A day before New Jersey’s cease-and-desist order was published, Seagal posted a tweet claiming that Bitcoiin was on the cusp of being “listed on some of the biggest exchanges globally,” with his message bearing an “#Ad” hashtag. He added that additional details are “coming very shortly.”

Officials framed Wednesday’s cease-and-desist action as an effort to protect investors in the state from potential fraud.

“The Bureau’s actions today are a reminder to investors that while celebrity endorsements can add to the excitement and hype of cryptocurrency-related investments, they do not guarantee that an investment is sound or even legal,” Attorney General Gurbir Grewal said in a statement.

Image Credit: Gage Skidmore/Flickr

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SEC: Celebrity ICO Endorsements Could Be Illegal

The U.S. Securities and Exchange Commission (SEC) has issued a warning to investors about celebrity-endorsed initial coin offerings (ICOs).

The SEC – which released a wide-ranging statement on the blockchain use case in late Julysaid today that celebrities who endorse token sales may run afoul of “anti-touting” laws if they don’t correctly state what compensation, if any, they may have received.

The agency said:

“Celebrities and others are using social media networks to encourage the public to purchase stocks and other investments. These endorsements may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement.”

In recent months, celebrities such as actors Jamie Foxx and William Shatner, boxing champ Floyd Mayweather, Jr., and hotel heiress Paris Hilton, among others, have publicly endorsed several projects ahead of their respective token sales.

The SEC also warned potential investors to not base their decisions solely on the endorsement of a celebrity.

“Investors should note that celebrity endorsements may appear unbiased, but instead may be part of a paid promotion.  Investment decisions should not be based solely on an endorsement by a promoter or other individual,” the agency wrote.

SEC emblem image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.