Celebrity endorsements are nothing new in the world of product promotion, but when it comes to the ICO market, its unregulated nature makes things very complicated. Recently, the Bureau of Securities of the US state of New Jersey issued a cease-and-desist order to the initial coin offering (ICO) of Bitcoiin, which was being promoted by the famous actor Steven Seagal.
The New Jersey Bureau of Securities issued the notice on March 7th. It explained that the blockchain firm is trying to sell unregistered securities to the residents of New Jersey.
The statement noted: “Bitcoiin has never been registered to sell securities in the State of New Jersey.”
It further explained the lack of information presented by the promoters of the project: “Bitcoiin’s developers, officers, managers, employees, controllers, and/or directors are anonymous.”
The involvement of Steven Seagal brought the project into the limelight last month, however, the questionable business model of the project soon attracted criticism, and it was even compared to an MLM or pyramid scheme. The company, however, was quick to release an official statement negating all the allegations against it.
In the order, the New Jersey Bureau of Securities also questioned the involvement of Steven Seagal in the ICO. As per the US Securities and Exchange Commission’s (SEC) directive, any celebrity involvement in an ICO promotion should disclose the nature, scope, and amount of compensation received in exchange for the endorsement.
The order explained: “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. 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.”
In a statement, Attorney General Gurbir S. Grewal said: “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.”
Although the promoters of the project did not release any official statement after receiving the authority’s cease-and-desist order, Asbury Park Press got in touch with a representative of Bitcoiin via email, who mentioned that the firm’s lawyers are currently reviewing the order.
However, the representative pointed out that Bitcoiin is a utility token, not a security, and so it does not come under SEC radar. The company wrote: “Therefore we do not have to comply with SEC, and if ever we were supposed to we would do so.”
(Photo: Wikimedia Commons)