VanEck settles with SEC for $1.75 million over launch of BUZZ ETF

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VanEck Associates has agreed to pay $1.75 million to settle charges from the U.S. SEC.

VanEck did not disclose the role of social media influencers in the launch of the new exchange-traded fund.

The Securities and Exchange Commission (SEC) announced that VanEck Associates Corp., a registered investment adviser, has agreed to pay a $1.75 million civil penalty to resolve charges related to its failure to disclose the participation of social media influencers in the launch of a new exchange. I did. – Traded funds (ETFs).

The ETF in question, BUZZ (Social Sentiment ETF), was launched in 2021 and attracted attention as it aims to track stocks that are popular on social media platforms.

However, VanEck Associates reportedly failed to disclose the influencer’s role and fee structure during the ETF approval process, limiting the board’s ability to assess the economic impact of the arrangement.

VanEck Associates did not admit or deny the SEC’s findings, but agreed to a cease-and-desist order, censure, and a $1.75 million civil penalty. The SEC’s order emphasizes the importance of accurate disclosure, particularly with respect to matters that may affect advisory agreements.

The BUZZ ETF does not focus solely on cryptocurrency stocks, but also includes exposure to the cryptocurrency market. Specifically, the fund holds stocks of Coinbase, PayPal, MicroStrategy, Robinhood, and Block.

VanEck was one of the companies to receive approval for a spot Bitcoin ETF in January, launching the fund alongside BlackRock and Ark 21Shares.

These developments highlight the need for transparency and compliance within the cryptocurrency industry as regulatory scrutiny continues to shape the digital asset investment landscape.

According to the SEC, VanEck used undisclosed social media influencers to promote the fund without informing investors. Influencer compensation was linked to the fund’s growth through a differential fee structure.

VanEck plans to reduce the sponsor fee for VanEck Bitcoin Trust (HODL) from 0.25% to 0.20% starting February 21 to attract more investors by offering a competitive fee structure.

This fee adjustment, as defined in the original S-1 statement, is very important because sponsor fees can impact fund performance. VanEck’s decision is consistent with the ongoing “fee wars” in the U.S. cryptocurrency market, where asset managers are lowering fees to lure investors.