Renowned blockchain and cryptocurrency businessman and author, Alex Tapscott, has been fined by the U.S. Securities and Exchange Commission (“SEC”) for securities violations by Ontario-based NextBlock Global (“NextBlock”) blockchain investment company. More specifically, he was charged with offering unregistered securities and misrepresentations during the investor solicitation process.
Launched in 2017, NextBlock raised $20MM in convertible debentures to invest in blockchain and cryptocurrency companies. In addition to offering unregistered securities, the company made claims that as many as four “prominent” individuals in the blockchain and cryptocurrency community acted as advisors to NextBlock which was not accurate.
A second round of financing was effectuated then cancelled, as was an application to list NextBlock on the Toronto Stock Exchange once rumours of misrepresentation surfaced.
NextBlock paid a CAD $700,000 penalty (USD $520,000) to the SEC. On determining Tapscott’s fine, the SEC considered the “promptly taken” remedial acts of Tapscott and determined a personal $25,000 fine and a cease and desist on further violations by Tapscott or NextBlock in the settlement.
Court proceedings have been voluntarily undertaken by NextBlock to wind up and liquidate the company’s existing cryptocurrency holdings and return the debenture holders principal with profits (approximately 140% as of March 2019).