Canada’s BCSC accuses delisted crypto investor BLOK of misrepresentation
All the abovementioned executives have all since left the firm and the BCSC’s allegations have not yet been proven as the investigation is ongoing.
The British Columbia Securities Commission (BCSC) has accused Vancouver-based blockchain technology investment company and three of its officers of making a misrepresentation about the sales of its shares, thus violating the Securities Act as BLOK traded on the Canadian Securities Exchange.
In 2018, BLOK Technologies announced it had raised approximately $5.4 million through a private placement, but did not disclose that it had already spent or owed approximately $4.4 million on consulting fees. As a result, BLOK would only retain approximately $950,000, which is less than 18 per cent of the amount raised.
According to the regulator, Robert Earle Dawson, BLOK’s president and CEO; James Joseph Hyland, its vice-president and director; and David Malcolm Alexander, its chief financial officer, authorized, permitted or acquiesced in the company’s misrepresentation and therefore also violated the Act.
Robert Earle Dawson, aka Rob Dawson, left in January 2019 and is currently Chief Executive Officer at IOVIA, a “consumer participation company”.
All the abovementioned executives have all since left the firm and the BCSC’s allegations have not yet been proven as the investigation is ongoing.
BLOK is “a public company that invests in and develops companies in the blockchain and emerging technology sectors”, according to its own description. The firm was delisted from the CSE in October 2020.
Alleged Misconduct
In a June 8, 2018 news release, BLOK announced that it had raised a total of $5,403,384 through a private placement. BLOK stated that the net proceeds would be used for advancing the company’s current blockchain investment projects, evaluating new blockchain opportunities, and for working capital purposes.
BLOK did not disclose that it would retain only $947,321.50, or less than 18%, of the amount raised because it had already spent or owed $4,456,062.50 on consulting fees.
By announcing the total proceeds from the private placement but failing to disclose that it would retain less than 18%, BLOK made a statement to investors that it knew, or ought reasonably to have known, was a misrepresentation contrary to the Securities Act.
