Body: A bit of a confession here too. I love Steven Seagal movies. They were a staple of my younger adulthood. The voice, the swagger, the action, to watch these movies is a guilty pleasure, for sure. He was (and continues to be) a very popular actor. But, all is not well in Seagal town. Mr. Seagal has been charged with “unlawfully touting” a digital asset. I am still not quite sure what this means. Given that this could happen to nearly any famous actor/celebrity, I would like to better understand where the lines are in this arena. So, with the caveat that this infraction could easily have happened to many different celebrities, let’s dive a bit into the story of Mr. Seagal, and use it as a cautionary tale.
So what happened anyway?
Mr. Seagal has not admitted any guilt, but he did settle with the SEC, so, I will be causing my High School English teachers hearburn by now changing to past tense. Mr. Seagal entered into an agreement with Bitcoiin2Gen (B2G) to help them promote their initial coin offering. In this agreement, he agreed to a press release and to promote the offering on his social media platform. All of this would’ve been OK, but he also forgot to disclose his compensation of $250,000 cash and $750,000 in tokens, and this failure to disclose his compensation for touting the securities was the nub of the rub. In an agreement with the SEC, he did pay just over $300,000 in disgorgement and penalty. In full disclosure, Mr. Seagal did actively participate with the SEC to aid their investigation and was keen to get it behind him, per his attorney. (Did you know that he is a “musician?” I didn’t. He plays the guitar and has 2 studio albums.)
Alright, so, a celebrity FAFO’d. Why does this matter to me?
Frankly, I can’t believe that you’re cynical enough to ask me this. JK, the take-home point here is that Mr. Seagal is not the only celebrity loudly touting digital assets. So, when you do see an actor speaking about a digital asset, please note that they should not be taken at face value. At the least, do a Google search and look to see if that celebrity has a material compensation plan from that cryptocurrency or digital asset. And, many of them do.
One that seems to typify the arena is Floyd Mayweather. He touted 3 separate ICOs and was penalized $600,000 by the SEC. DJ Khaled did something similar and ended up paying the SEC more than $150,000.
The Verdict
OK, I have to admit that with the subject matter, this one was a fun article for me to write. I love Steven Seagal movies and will continue to be entertained by them, even if the actor himself appears to have some moral failings. But ,it’s the moral failings of our legal system I wanted to point out. One thing that I read many many times in preparing this article is that he couldn’t promote any securities for 3 years.
Three years seems to be a very specific amount of time, and it seems to be in the middle of really serious (e.g. never being allowed to tout securities again) and something very light (e.g. community service.) Perhaps the SEC assumed that 3 years from the time of the settlement, cryptocurrency might be a dead issue. But this seems unlikely. Perhaps 3 years was just significant enough to get other celebrities to think before they touted a cryptocurrency. Frankly, I’m not sure if I would’ve come to a similar solution. Would you?
REFERENCES
SEC.gov | Actor Steven Seagal Charged With Unlawfully Touting Digital Asset Offering
Steven Seagal fined by SEC in crypto case – The Washington Post
Steven Seagal Settles Token-Touting Charges With SEC Over 2018 ICO – CoinDesk
Steven Seagal settles SEC cryptocurrency bitcoin touting case (cnbc.com)
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.
The Verdict
REFERENCES
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.