"Bitcoiin" has run afoul of the law in New Jersey.
Image: Flickr/Gage Skidmore
In late February Steven Seagal did something completely bizarre—and hence also completely in character—and endorsed a sketchy cryptocurrency startup called “Bitcoiin.”
Bitcoiin—an Etheruem-based token that is not associated with Bitcoin—markets itself as the “next generation of Bitcoin” and is selling tokens to investors after recently completing an Initial Coin Offering (ICO) that the startup claims raised $75 million USD. “In actuality,” a cease-and-desist order filed on Wednesday by the State of new Jersey Bureau of Securities reads, “Bitcoiin is fraudulently offering unregistered securities in violation of the Securities Law.” Whoops!
The startup isn’t the only entity Under Siege by the New Jersey regulator; the filing also took shots at Seagal’s credibility, even though it’s apparently Hard to Kill. “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 states. Remember, Seagal’s contribution to the press release announcing his endorsement was, “Flow with whatever may happen and let your mind be free. Stay centered by accepting whatever you are doing. This is the ultimate.”
Bitcoiin also does not disclose the nature or scope of compensation paid to Seagal for his endorsement, the order states. Further, the order notes that while the Bitcoiin website promises investors returns of 12 percent per year on tokens, the fine print states that buying tokens “carries no promise of any return, profit or gain,” which the New Jersey order points out is a glaring contradiction.
Although Bitcoiin attempted to shield itself from securities regulators by stating that any price gains will come from market dynamics alone and not the efforts of the Bitcoiin team, even indirectly—a key part of the test for determining if a digital token is a security or not—the New Jersey regulator states that the startup offers no evidence to back this claim up.
All in all, the order concludes, the Bitcoiin team are offering unregistered securities, “engaging in fraud in connection with the offer or sale of securities,” and making “materially misleading statements” to potential investments. The final word: Bitcoiin can’t legally sell its tokens to residents of New Jersey.
Not even an endorsement by Steven Seagal can make your startup Above the Law if regulators are Out for Justice.
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