VanEck was fined $1.75 million by the Securities and Exchange Commission (SEC) for failing to disclose the role of social media influencers in the launch of an exchange-traded fund (ETF).
In March 2021, Van Eck launched the Social Sentiment ETF, which trades under the ticker BUZZ. The U.S. Securities and Exchange Commission said the ETF tracks the index based on “positive insights” from social media and other data, but did not disclose this.
The SEC said Mr. van Eck failed to disclose the influencer's “planned engagement” and sliding-scale fee structure to the ETF board in connection with the fund's launch and approval of management fees.
VanEck violates the Investment Company Act
Van Eck consented to the entry of the SEC's order, which determined that it violated the Investment Company Act and the Investment Advisers Act. The investment firm neither admitted nor denied the SEC's findings, but agreed to a cease-and-desist order and reprimand in addition to the fine.
“Fund boards rely on advisors to provide accurate disclosures, particularly when they involve issues that may affect advisory agreements, known as the 15(c) process,” SEC Enforcement Division Asset Management Unit said Andrew Dean, co-director of
“Van Eck Associates’ failure to disclose information regarding this high-profile fund launch makes it important to consider the financial impact of the licensing agreement and the high-profile social media It limited the board’s ability to consider influencer engagement,” Dean added.
Kim Kardashian sued by SEC
In recent years, a handful of celebrities including Kim Kardashian, Lindsay Lohan, Floyd Mayweather, Jake Paul and Matt Damon have promoted crypto projects that have faced the wrath of US regulators.
There are many reasons why more and more celebrities are getting involved in promoting financial and crypto products. The most obvious is due to lucrative economic opportunities. Another reason for its popularity is publicity and branding, where celebrities play an important role in influencing today's society.
Over the years, cryptocurrencies and non-fungible tokens have grown, and just being associated with cryptocurrencies can increase a celebrity's profile and appeal to a younger audience interested in digital assets.
VanEck lowers Bitcoin ETF fees to 0.20%
Amid increased market competition, VanEck last week lowered fees on its HODL exchange-traded fund (ETF) VanEck Bitcoin Trust from 0.25% to 0.20%. In a saturated market, more than a dozen Bitcoin ETFs are vying for investor attention.
BlackRock plans to set the iShares ETF's fee at 0.12% for the first 12 months or the first $5 billion in assets under management, and increase to 0.25% thereafter.
Other issuers such as ARK Invest charge 0.21%, while Bitwise charges 0.20%. Spot Bitcoin ETFs are becoming an increasingly go-to option for mainstream investors. These address issues such as storing crypto assets and dealing with fraudulent service providers.
