SEC Forces VanEck to Pay a $1.75 Million Fine and Here is Why

• The SEC fined VanEck $1.75 million for failing to disclose an influencer’s promotion of its BUZZ ETF without admitting wrongdoing.
• Launched in 2021, BUZZ is an ETF that tracks social media sentiment on stocks like Coinbase and Tesla. The undisclosed influencer likely was Barstool’s Dave Portnoy.
• VanEck is a major player in crypto ETFs, but the SEC order warns that influencer relationships must be disclosed even as firms embrace digital assets.

VanEck Agrees to Settlement Without Admitting Wrongdoing

The U.S. Securities and Exchange Commission (SEC) has fined asset manager VanEck $1.75 million for failing to disclose an influencer’s promotion of its VanEck Social Sentiment ETF (BUZZ).

VanEck agreed to pay the fine without admitting or denying the SEC’s charges. The regulator alleged VanEck used an unnamed influencer to promote BUZZ but did not tell investors about the relationship.

BUZZ Tracks Investor Sentiment on Social Media

Launched in 2021, BUZZ trades on the NYSE Arca exchange and tracks the social media activity of 75 large cap stocks. The ETF uses algorithms to analyze sentiment in news articles, blogs, and platforms like Twitter and Reddit.

The portfolio includes stocks like Coinbase, PayPal, Tesla, and MicroStrategy. As BUZZ grew, the undisclosed influencer received more money through a sliding scale licensing agreement.

Influencer Believed to be Barstool Sports’ Dave Portnoy

While not named in the complaint, Dave Portnoy of Barstool Sports was involved with BUZZ’s launch. In the past, Portnoy proclaimed he would “never buy Bitcoin” and called it “junk.”

VanEck is a Major Player in Crypto ETFs

VanEck is behind several cryptocurrency ETFs, including a Bitcoin Trust that launched in early 2023. It has also proposed a spot Ethereum ETF to the SEC, which must approve or deny it by May.

Despite past anti-crypto comments, the influencer promotion points to financial firms increasingly embracing digital assets. The SEC order serves as a warning that these relationships must be disclosed.