The U.S Securities and Exchange Commission (SEC) has slapped blockchain author Alex Tapscott and investment company NextBlock Global with fines because of violations in securities.
The SEC says that NextBlock, which is based in Canada, has been providing non-SEC registered securities and that the company made false claims to deceive investors. Thus, the regulator ordered “Blockchain Revolution” co-author Tapscott to pay a $25,000 penalty and also released a cease-and-desist order on other securities violations by him or his company.
The SEC stated it had considered the remedial acts “promptly undertaken” by Tapscott and NextBlock when deciding on the terms of the settlement. It also stated that after the company paid an administrative penalty worth 700,000 Canadian dollars (around US$520,000), it had not charged a further civil penalty on the firm.
Established in 2017, NextBlock secured $20 million at the time through a type of debt instrument called convertible debentures to invest in blockchain and cryptocurrency firms, the agency said.
Furthermore, the SEC stated that in order to solicit investor funds in Canada, U.S., and elsewhere, NextBlock and Tapscott made false representations, saying that four “prominent” personalities in the blockchain industry were standing as advisors to the company.
According to the order, NextBlock and Tapscott also planned another funding round and tapped two Canadian investment banks as advisors for the initiative, as well as to assist the firm to be listed on to the Toronto Stock Exchange. NextBlock eventually canceled the round and its initial public offering plan after the misrepresentations of investors surfaced media reports.
NextBlock subsequently went voluntarily for Ontario proceedings to end up operations and liquidate its current cryptocurrency holdings, and refund debenture holders with principal investment with added profits (roughly 140 percent of March this year).
The order states that Topscott has given up willingly his right to get his share from NextBlock’s profits worth more than $2 million, an amount that was kept by the company and added to the distributions to debenture holders.