Steven Seagal, a certified ’90s action star and a present-day “action” “star,” claims to be many things: His official website variously describes him as a “Martial Arts expert,” a “beloved actor,” a “healer,” and a “distinguished Blues musician.” As of February, he added one more title to that impressive roster: cryptocurrency pitchman. And as of this week, the cryptocurrency in question is in legal trouble. If that’s surprising, you probably haven’t been following Seagal’s career closely.
In 2017, Amy Zimmerman highlighted some of the actor’s greatest hits in the Daily Beast: Among other things, he’s helped advertise for a Russian arms manufacturer, made a reality show with Joe Arpaio, and most famously, is friendly with Vladimir Putin. He’s also been repeatedly accused of sexual harassment and assault, claims that he tried to brush off in an interview with Infowars’ Alex Jones.
Given all of that, it likely comes as little surprise that “Bitcoiin2Gen,” the cryptocurrency Seagal chose to endorse in February, was deeply questionable. The first and most obvious warning flag is the currency’s name, which mostly just adds an extra “I” to the more reputable “Bitcoin.” But there were other warning signs, too: As CNet noted shortly after the announcement, “It’s not necessarily clear what problem Bitcoiin2Gen is for.” The site CoinDesk, meanwhile, questioned Bitcoiin’s referral commission program, suggesting that it resembled a pyramid scheme. (The graphic that Bitcoiin uses to describe this program is literally shaped like a pyramid.) It also pointed out that “information about Bitcoiin’s official backers isn’t available on the website.”
Those backers—whoever they might be—have spoken up in their own defense, but their rejoinder wasn’t exactly reassuring. As a rule of thumb, if you have to begin your press release with the phrase, “Of course, we are not an MLM [multilevel marketing] company or any Pyramid Scheme or Scamming people,” as Bitcoiin2Gen did in that statement, you may already be in trouble. The rest of the document is similarly eyebrow-raising, full of phrases that feel like they were repeatedly run back-and-forth through an unfinished translation algorithm. Attempting to explain away the anonymity of its creators, for example, the company writes, “For a fact being anonymous or being physically present doesn’t increase or decrease the efficiency of any cryptocurrency and Bitcoiin2Gen is not entirely anonymous as we are using the Ethereum Blockchain.”
If you find these assurances unconvincing, you’re not alone. On Tuesday, the New Jersey Bureau of Securities issued a cease-and-desist order against Bitcoiin2Gen’s planned initial coin offering. The document is thorough in its presentation of the problems with the larger Bitcoiin project, flagging many of the issues identified by earlier critics, including “the identity of its principals,” “its physical address and its principal place of business,” and “the persons or entities that developed B2G, including the number of B2G coins owned by these persons or entities, and the amount of B2G owned by the principals of Bitcoiin.”
But as CoinDesk writes, the order also focuses on “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’s fitting, since it was likely Seagal’s promotional role that brought the state’s attention to the matter—hardly the ideal outcome for celebrity sponsorship. The order notes several outstanding questions about his involvement, including “whether Steven Seagal owns any B2G,” “the nature, scope, and amount of compensation received in exchange for Steven Seagal’s promotion of B2G,” and “if Steven Seagal has any expertise to ensure that the investment is appropriate and in compliance with federal and state securities laws.”
Though the order’s scope is obviously limited—it applies only to the sale of securities in New Jersey itself—it seems entirely possible that other jurisdictions will take the issue up in similar terms. Even if they do, Seagal and his blockchain-powered friends will likely be fine. If worse comes to worst, they can always try Russia.