The Securities and Exchange Commission (SEC) has brought charges against VanEck Associates Corporation for withholding information about a social media influencer’s involvement in the launch of its latest exchange-traded fund (ETF).
In March 2021, VanEck unveiled the VanEck Social Sentiment ETF (NYSE:BUZZ), designed to monitor an index based on positive sentiments expressed on social media and other data sources.
However, a probe by the regulator revealed that VanEck had neglected to disclose vital details concerning a prominent social media influencer’s intended participation and the fee structure linked to the ETF’s launch.
Andrew Dean, the Co-Chief of the Enforcement Division’s Asset Management Unit at the SEC, stated: “Van Eck Associates’ disclosure failures concerning this high-profile fund launch limited the board’s ability to consider the economic impact of the licensing arrangement and the involvement of a prominent social media influencer as it evaluated Van Eck Associates’ advisory contract for the fund.”
According to the press release, the SEC stressed the significance of accurate disclosures within the financial sector, particularly regarding matters that could impact advisory contracts and fund debuts.
VanEck Associates has consented to the SEC’s order, agreeing to pay a civil penalty of $1.75 million and abide by a cease-and-desist order and censure as part of the settlement.
While not admitting or denying the SEC’s findings, VanEck has pledged to address the lack of disclosure and adhere to regulatory standards.
Last month, VanEck demonstrated a substantial commitment to the Bitcoin community by announcing plans to allocate 5% of the fund’s profits to support Bitcoin developers.
VanEck is one of the asset managers granted approval by the SEC to launch a spot Bitcoin ETF.
Furthermore, VanEck is broadening its offerings to encompass the Ethereum blockchain.
With the introduction of the VanEck Ethereum Strategy ETF (EFUT) last year, the company aims to provide investors with a tax-efficient avenue for participating in Ethereum’s future contracts.
Differing from conventional cryptocurrency investment strategies, VanEck’s EFUT ETF focuses on Ethereum futures contracts, offering investors a tax advantage.