Blockchain entrepreneur Alex Tapscott will pay a US$25,000 penalty as part of a settlement with the U.S. Securities and Exchange Commission over allegations that his venture-capital fund raised money using untrue statements.
The settlement comes a day after the Ontario Securities Commission approved its own settlement with Mr. Tapscott and NextBlock Global Ltd., the fund that the 33-year-old Toronto resident co-founded and ran. Mr. Tapscott and NextBlock have already paid a total of $1.1-million in fees and expenses as part of the settlement with the OSC. He has also voluntarily penned an open letter about the consequences of his misconduct that he has pledged to publish in a national publication and committed to teach ethics seminars to business students that touch on the same themes.
The SEC alleges that Mr. Tapscott and his fund Nextblock, which was aiming to invest in public and private early-stage blockchain companies, made material misrepresentations in relation to a securities offering in 2017 that raised US$2.4-million from U.S. investors.
The misrepresentations were made in documents circulated to prospective investors, which falsely stated that as many as four prominent blockchain figures were serving as advisers to the company.
NextBlock raised a total of US$16-million through a private placement in the summer of 2017 and had planned to go public through a reverse takeover of a TSX-listed shell company that fall.
The go-public attempt was cancelled in November, 2017, after Forbes magazine reported that four of the people listed as advisers to the company had never agreed to act in those roles.
Following the news, both CIBC World Markets Inc. and Canaccord Genuity Group Inc. withdrew as underwriters and NextBlock wound up its operations. It also repaid investors their initial investment, plus an additional $28-million in profits. Mr. Tapscott voluntarily declined roughly $3-million to which he was entitled.
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