Crypto Investment Firm Bitcoiin Receives Cease-And-Desist Order From New Jersey Bureau of Securitiesbr>
The New Jersey Bureau of Securities has issued a cease-and-desist order to an initial coin offering (ICO) endorsed by movie star Steven Seagal.
On Wednesday, Attorney General Gurbir S. Grewal and the Division of Consumer Affairs announced that the Bureau of Securities issued an emergency order to stop Bitcoiin, an online cryptocurrency investment entity, from offering unregistered securities in the state of New Jersey.
Bitcoiin recently announced an ICO for its B2G tokens on March 26. The company wants to raise $250 million to build a “self-sufficient” ecosystem that includes the opportunity to purchase B2G, altcoins and government currencies “on a secure comprehensive platform.”
In the summary cease and desist order, the Bureau said the company is violating the State’s Uniform Securities Law by offering investors unregistered securities in its ICO. It also found that Bitcoiin violated the law by failing to disclose key material facts to prospective investors, including the identities of its principals, the physical address of its business, and the risks associated with the Bitcoiin investments.
The order also highlight 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 said, officials drew issue with the lack of information regarding the compensation he may have received.
“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 explains. “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.”
A day before the cease-and-desist order was published, Seagal promoted Bitcoiin on his Twitter feed. “Friends, I wanted to announce that @Bitcoiin2Gen will soon be listed on some of the biggest exchanges globally. Stay tuned for more information coming very shortly,” he tweeted.
Bitcoiin said the company’s lawyers are reviewing the state Bureau of Securities statement before issuing a formal response. According to the company, Bitcoiin is a utility token, not a security. “Therefore, we do not have to comply with SEC, and if ever we were supposed to we would do so,” the company said.
Attorney General Grewal said the Bureau’s actions are a reminder to investors that while celebrity endorsements can add to the excitement and hype of crypto-related investments, they do not guarantee that an investment is sound or even legal.
“As the online cryptocurrency-related investment market continues to evolve, the Bureau will vigilantly monitor the market to protect New Jersey investors from the high risk of fraud associated with these largely unregulated products,” said Grewal.
Sharon M. Joyce, Acting Director of the Division of Consumer Affairs, said investing in cryptocurrencies carries a significant risk that requires individuals to be extra vigilant in vetting offers before deciding to invest.
“Alarm bells should go off when investors are asked to transmit funds to an unidentified online entity that fails to disclose who is behind its investment products, the financial status of its business, and the physical location of its operation,” said Joyce.