Company investigated for trading in securities without registration
The Ontario Securities Commission has approved a settlement agreement with crypto-asset consulting firm CoinLaunch, after the latter was found to have traded in securities without registration.
CoinLaunch, which chose to wind down its operations rather than initiate a registration process, will pay a fine of $30,000 and disgorge $12,223.06, a statement from the OSC said. CoinLaunch's former CEO Reuven Cohen has also agreed not to become or act as a director or officer of any company which engages in or holds itself out as engaging in trading securities, without the applicable registration or an exemption under Ontario securities law.
“If you are operating in the crypto-asset sector in Ontario, you must take steps to investigate and understand your obligation to comply with registration requirements under securities law,” said Jeff Kehoe, the OSC’s director of enforcement. “Businesses that choose to ignore this obligation should consider themselves on notice and will face more severe consequences.”
According to the OSC, between March 1, 2018 and September 30, 2018, CoinLaunch advertised and provided services to issuers of crypto-asset tokens, which included helping clients administer and promote crypto-asset token offerings. Together, these services were deemed acts in furtherance of trades, and required registration under Ontario securities law.
The commission said that despite its support mechanisms to foster Ontario's emerging crypto-asset sector and CoinLaunch’s knowledge of the registration requirements, the crypto-asset company did not seek registration. However, during the OSC's investigation, CoinLaunch cooperated with staff and took steps to remediate its conduct, such as taking down websites it had created for crypto-asset token issuers and ceasing its business relationship with token issuers.