Actor Steven Seagal settles SEC case over undisclosed payments for touting cryptocurrency

Key Points
  • The Securities and Exchange Commission said it settled previously undisclosed charges against movie actor Steven Seagal for failing to disclose he was being paid as he touted an investment in an initial coin offering.
  • An SEC order said Seagal agreed to pay $314,000 in disgorgement and penalties for violating anti-touting provisions of federal securities laws in promoting Bitcoiin2Gen, a cryptocurrency system.
  • The SEC said that Seagal "failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions."
Actor Steven Seagal
Brett Costello | Newspix | Getty Images

The Securities and Exchange Commission said Thursday that it had settled previously undisclosed charges against faded action movie actor Steven Seagal for failing to disclose that he was being paid as he promoted a cryptocurrency investment.

An SEC order said Seagal, who agreed to pay $314,000 in disgorgement and penalties in a settlement, violated anti-touting provisions of federal securities laws during the very brief amount of time he spent as "brand ambassador" for the "Bitcoiin."

The $157,000 that Seagal paid in disgorgement was approximately equivalent to the amount of money he was actually paid by the company.

The SEC said that Seagal, a 67-year-old martial arts expert who is currently residing in Moscow, Russia, "failed to disclose he was promised $250,000 in cash and $750,000 worth of B2G tokens in exchange for his promotions" for an initial coin offering conducted by Bitcoiin2Gen, a cryptocurrency system.

Those promotions included public social media account posts that urged people not to "miss out" on Bitcoiin2Gen's initial coin offering and "a press release titled 'Zen Master Steven Seagal Has Become the Brand Ambassador of Bitcoiin2Gen,'" the SEC said.

That Feb. 13, 2018, press release said, "The inspiration of Bitcoiin2Gen is to make a superior or more advanced version of Original Bitcoin."

Within days of the release, Seagal's Twitter account, which had about 107,000 followers, began posting messages about the company and its imminent initial coin offering.

"Don't miss out," a Feb. 28, 2018, message on the Twitter account said, which was echoed the following day with "the same tout" on Seagal's Facebook account, according to the SEC. The Facebook account had about 6.7 million followers.

The SEC said, "These promotions came six months after the SEC's 2017 DAO Report warning that coins sold in ICOs may be securities."

The agency also noted that under anti-touting provisions of 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."

Chris Nassif, a spokesman for Seagal, said in an email that that the actor had been "approached by certain individuals who said they were creating a digital currency and wanted him to be the 'brand ambassador.' "

"Mr. Seagal, after consultation with others (including counsel), believed the product was a digital currency," Nassif said. "He then agreed to allow his likeness to be used to promote the product. He allowed others to post certain items on his social media accounts regarding the product. At some point, Mr. Seagal became concerned with the bona fides of the product and terminated the relationship."

"Mr. Seagal was not involved in the creation of this product, nor did he have any prior relationship with the individuals who approached him," the spokesman said. "To him, it was simply a case of someone paying a celebrity for the use of his image to promote a product."

Nassif noted that the SEC did not charge Seagal with fraudulent conduct. He also said the actor "cooperated fully" with the investigation "and this matter is now behind him."

"He looks forward to continuing his life's work as an actor, musician, martial artist and diplomat."

Seagal's stint as a promoter for Bitcoiin2Gen was short-lived.

On March 7, 2018, the New Jersey Bureau of Securities issued a cease-and-desist order against BitCoiin2Gen, which said the firm is "fraudulently offering unregistered securities in violation of the Securities Law."

That order noted that Bitcoiin2Gen's press release about Seagal did not disclose the nature, scope or amount of compensation paid to Seagal for his promotion of the investment.

A press release issued by Bitcoiin2Gen just six weeks after Seagal's involvement in the company was announced said he was no longer serving as brand ambassador.

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Seagal, who starred in films including "Above the Law," "Under Siege," "Hard to Kill" and "Out for Justice," did not admit or deny the SEC's findings.

But he agreed not to promote any securities, digital or otherwise, for three years, according to the agency.

"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."

The SEC's investigation is continuing, according to the agency.

Seagal was a major box-office star in the 1980s, but more recently his films have been released direct to video in the United States, as opposed to theatrically released.

He also has become a supporter of Russia's president, Vladimir Putin, who granted him Russian citizenship in 2016.

In 2018, Russia appointed Seagal a special envoy to help improve ties with the United States.

That same year, allegations of sexual misconduct by Seagal also made news.

The Los Angeles County district attorney in December 2018 declined to file possible charges against Seagal related to allegations that he sexually assaulted a model in 2002. The DA's office did not pursue the case because the statute of limitations for possible charges had expired.

The DA's office earlier in 2018 said it would not file a potential felony sexual abuse charge against Seagal dating to an incident in 1993 in part because the statute of limitations had run out.

Seagal has denied allegations of sexual misconduct made against him.