The New Jersey Bureau of Securities has slapped the Steven Seagal-backed initial coin offering (ICO) “Bitcoiin2Gen” (Bitcoiin or B2G) with a cease and desist order, alleging that it is fraudulently selling unregistered securities.
The order, which was entered on March 7, is not entirely surprising, as the project was characterized by a number of red flags — and regulators have not been shy about the fact that no ICO is Above the Law.
Most notably, New Jersey’s securities officials took issue with action film hero and “Zen Master” Steven Seagal’s endorsement of the token sale.
“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 reads. “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.”
The SEC, incidentally, has called such endorsements “potentially unlawful” and has warned that celebrities who endorse securities offerings without making proper disclosures could face prosecution.
Moreover, as CCN reported — and New Jersey noted in its cease and desist order — an infographic explaining the ICO’s referral program is literally shaped like a pyramid, although the company has assured concerned parties that it is not a pyramid scheme.
Finally, the ICO also projected that its B2G tokens — which are priced at $5 each during the token sale — will be worth $388 by December, netting investors a cool 7,700 percent profit. Marketing an ICO as an investment, however, is one of the easiest ways to have one’s token sale flagged as a securities offering.
In addition to being prohibited from offering its tokens to New Jersey residents, the order warned that Bitcoiin may face other enforcement actions, including both ancillary relief and civil penalties.
Bitcoiin2Gen — which now finds itself Under Siege, as it were — has not addressed the cease-and-desist order publicly, instead saving its Twitter feed for more important matters — such as retweeting Maxim articles discussing the merits of one-night stands.
Featured image from Shutterstock.
Last modified: May 20, 2020 9:02 PM UTC