Cryptocurrency markets have been booming of late - and in an attempt to gain more attention, ICOs are now looking at celebrity endorsements. Late last month, we reported that Hollywood action star Steven Seagal was endorsing a shady cryptocurrency ICO named ‘Bitcoiin2Gen’. As per the latest news update, this Steven Seagal backed ICO has been served a cease and desist notice by the state of New Jersey. 

This notice has been sent to the promoters of the currency by the New Jersey Bureau of Securities, which claim that Bitcoiin2Gen is fraudulently selling unregistered securities. As noticed earlier, the SEC has been going strict on all ICOs and exchanges dealing in unregistered securities - and this looks as the direct action of the SEC’s statements. 

Interestingly, while Steven Seagal was hired to promote the ICO, it was his involvement which has raised the most questions here - leading up to the cease and desist notice. The order issued by the New Jersey security officials reads: “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.”

There were a number of things about this ICO which made it quite shady. First off, this ICO which is named after Bitcoin, is actually based on the Ethereum blockchain. Despite this, the B2G website keeps comparing its tokens with Bitcoin time and again, claiming to be better, faster and cheaper than Bitcoins. 

The SEC has termed celebrity endorsements such as these ‘potentially unlawful’ and has stated that celebrities who endorse such fraudulent ICOs could possibly face prosecution over their association with the scam and for misleading people to invest into these companies. Further, the cease and desist order sent out by the state of New Jersey proves that the operations of the company are clearly like a pyramid scheme, which B2G has clearly denied to be. 

The Bitcoiin2Gen ICO claimed that their B2G tokens, which, at the time of the sale were worth $5 per token, would soon be worth $388 (by December, as they claim) and investors would be making a 7700% profit per B2G token. However, considering that they marketed their ICO as an investment opportunity automatically classifies them as a security token - which needs to be regulated. 

The cease and desist notice sent out to Bitcoiin2Gen states that they are not allowed to trade with New Jersey residents anymore. Moreover, additional legal actions might also be taken upon the token, such as ancillary relief as well as civil penalties. 

In the past too, platforms such as Bitconnect and Davorcoin which have been acting as illegal platforms for trading security tokens or as Ponzi schemes and scams were forced to cease and desist their operations in various US states.