Blockchain investment firm NextBlock Global Ltd. and its founder, Alex Tapscott, are paying $1.1 million as part of a settlement to resolve regulators’ allegations that they misled investors in offering materials.

A hearing panel of the Ontario Securities Commission (OSC) on Monday approved a settlement with Tapscott and his former firm, NextBlock, that will see them agree to a combined $1-million administrative penalty ($700,000 from NextBlock and $300,000 from Tapscott), along with $100,000 in costs, after admitting to misleading investors in NextBlock’s offering materials.

Specifically, the regulator alleged that they misled investors in a slide presentation that named certain prominent players in the fledgling blockchain industry as advisors to the firm, which was not the case.

“We will not tolerate market participants who play fast and loose with the facts when providing offering memoranda to prospective investors, including marketing decks,” said Jeff Kehoe, director of enforcement at the OSC, in a statement. “This dishonest behaviour robs investors of the opportunity to make informed investment decisions and undermines confidence in our markets.”

After the misleading slides were uncovered and publicly reported by Forbes.com, a planned private placement and reverse takeover were ultimately scrapped, and the firm was subsequently wound up.

In addition to the monetary sanctions, Tapscott also agreed to publish an open letter “about the impact and consequences of his misconduct” and to lecture students at three Canadian business schools within the next 18 months about the impact of misconduct.

In its reasons for approving the settlement, the OSC panel noted that it’s somewhat unusual that the sanctions don’t include a director/officer ban on Tapscott.

“Such a prohibition might well be called for, particularly because Mr. Tapscott was a registrant for a number of years. He is experienced in the securities industry and he ought to have known better,” the panel said.

However, it found that the community service component of the sanctions highlight “Tapscott’s clear acknowledgment of responsibility for his serious misconduct” and the terms of the settlement will still “send a clear message to others” in the emerging blockchain industry.

“While an individual in a future similar case might encounter more difficulty avoiding such a ban, I conclude that the sanctions in this case, taken together, fall within a reasonable range,” the panel said.

Notwithstanding the misleading slide presentation, investors in the original deal made a significant profit.

They have already received a $28-million return on top of the return of their initial $20-million investment, and may receive more as part of the firm’s ongoing windup proceedings.

According to the settlement, NextBlock and Tapscott co-operated with the OSC’s investigation and sought to reach an early resolution of the case.

Tapscott also declined to take $3 million worth of carried interest that he was entitled to, instead returning that money to investors.