Cryptocurrency company founder can appeal fraud conviction: Ontario Court of Appeal

The Ontario Court of Appeal has given the founder of a cryptocurrency company permission to appeal a fraud conviction he received for lying to investors, ruling that the appeal will give the court the chance to clarify whether a 2024 Supreme Court of Canada decision changes the criteria that appellate courts must consider when entering a conviction under Ontario’s Provincial Offences Act.

In Friday’s decision in Ontario Securities Commission v. Katmarian, Justice Sally Gomery said that clarifying the impact of the SCC’s ruling in R. v. Hodgson – which addresses the scope of the Crown’s right to appeal acquittals – is “essential in the public interest and for the due administration of justice.”

But Brian Greenspan, who represents Peblik Inc. founder Stephan Katmarian, took issue with the fact that the OCA’s ruling only gives Katmarian the chance to appeal this procedural issue and not the substantive issues in the case.

Greenspan argues that this result is emblematic of how the Provincial Offences Act – which allows parties to appeal rulings only in limited circumstances – breaches the “fundamental” principle that individuals should never be subject to conviction without the opportunity for appellate review.

“You shouldn’t be exposed to the risk of a loss of liberty by a single judge whose decision is not reviewed,” Greenspan says.

The fraud allegations against Katmarian had been brought by the Ontario Securities Commission, which accused Peblik of making false representations that one of its cryptocurrency tokens was secured by its interest in the Thierry Mine, a copper mine in northern Ontario.

The Ontario Court of Justice acquitted Katmarian of the fraud charge, finding that the commission had failed to prove that investors who purchased the Peblik tokens had done so based on specific false statements about the company’s interest in the Thierry Mine.

The commission appealed the court’s ruling to the Ontario Superior Court of Justice, which allowed the appeal and convicted Katmarian of fraud.

Under the Provincial Offences Act, defendants, prosecutors, and intervening attorneys general can appeal a ruling with the OCA based “on special grounds, upon any question of law alone or as to sentence.” However, the OCA can only grant leave to appeal if it “considers that in the particular circumstances of the case it is essential in the public interest or for the due administration of justice that leave be granted.”

In Friday’s decision, the OCA emphasized, “No matter how wrong the judgment under appeal may appear to be, leave shall not be granted unless the moving party can articulate a question of law alone, the resolution of which, by this court, is essential in the public interest or for the due administration of justice.”

The OCA determined that clarifying the impact of the R v. Hodgson justified granting Katmarian leave to appeal.

In its analysis, the appellate court noted that in that case, the Supreme Court had considered the limits that the Criminal Code imposed on the Crown’s right to appeal acquittals to questions of law alone. The appellate court noted that the Provincial Offences Act did not place the same limits on the Crown’s right to appeal an acquittal.

The OCA added that “where a prosecutor’s appeal under the Provincial Offences Act is successful, an accused’s right to a second appeal is subject to [a] very high threshold,” leaving “open the possibility that a conviction on appeal will not be subject to any appellate review.”

“It’s our position that there must always be a right to review a conviction by an appellate court,” Greenspan says. “Here, the accused can be deprived of that right of appeal.”

The Ontario Securities Commission did not respond to a request for comment.