OSC to hold settlement hearing with blockchain investment firm

Securities regulators are set to consider a settlement with a former blockchain investment firm and its founder, Alex Tapscott, who are alleged to have misled prospective investors in slide presentations.

The Ontario Securities Commission (OSC) will hold a hearing on May 13 at its offices in Toronto to consider a settlement agreement between the regulator’s enforcement team, Tapscott and his firm, NextBlock Global Ltd.

The terms of the settlement will only be revealed if the agreement is approved by the OSC.

According to allegations unveiled on Thursday, OSC staff allege that Tapscott and NextBlock “made misleading statements in offering memoranda (OM) provided to over 100 prospective investors in a private placement that raised approximately $20 million from 113 accredited investors.”

The allegations have not been proven.

“The offering memoranda took the form of investor slide decks and represented certain prominent figures in the blockchain space as NextBlock’s advisors when these individuals had not agreed to act as its advisors and had not consented to being included in the investor slide decks,” the OSC said.

Due to the misleading claims in the OM, the commission said investors “were deprived of the opportunity to make a fully informed investment decision.”

Nevertheless, the investment worked out for them. Ultimately, the firm was wound-up, with investors receiving $28 million in profits, along with the return of their original investments.

“As part of the wind-up… Tapscott has voluntarily declined approximately $3 million in carried interest that he was entitled to based on NextBlock’s profits,” the regulator’s allegations reported, adding that the $3 million was instead paid out to investors.

The wind-up came in the wake of the discovery of the false information in the original OM, which was revealed by Forbes.com in 2017, leading to the cancellation of a second, larger private placement and a planned reverse takeover by the firm.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.