OSC Settles Allegations Relating To Cryptocurrency Tokens

On January 26, 2024, Ontario's Capital Markets Tribunal (the Tribunal) approved a settlement [PDF] in the matter of Nicholas Agar and Paul Ungerman (the respondents), representing the first time the Ontario Securities Commission (OSC) has settled allegations relating to the promotion and sale of cryptocurrency tokens.

Although the Tribunal was clear that it was not adjudicating whether a cryptocurrency token constitutes a security, this matter highlights the OSC's commitment to enforcing the Securities Act (the Act) in respect of cryptocurrency assets, notwithstanding that the status of such assets under the Act is still unclear.

Background

As is typically the case in OSC settlements, the settlement agreement came before the Tribunal on the basis of a set of agreed facts. The parties agreed that between 2018 and 2022, the respondents and the corporate entities they controlled (the Axia Entities) created and raised approximately US$41 million from investors