The Ontario Securities Commission (OSC) on July 24 announced that it had settled charges with CoinLaunch, a company that helped crypto startups to execute token offerings such as an ICO or STO successfully.
CoinLaunch according to the approval of settlement notice existed as a crypto consulting firm offering services such as marketing and promoting token offerings, deploying the tokens on-chain, writing and distributing white papers, advising on structure, etc.
However, the company did not register as a securities dealer with the OSC while carrying out these activities which amounted to an “act in furtherance” of trades of the tokens.
The OSC ruled that the tokens which CoinLaunch helped to create and promote were investment contracts, and as such, the firm required a dealer registration or an exemption (they never applied for any).
Precisely, the OSC mentioned two offerings promoted by CoinLaunch, which qualified as investment contracts or securities. One was for BCZERO, a project that raised money for a Czech off-road truck racing team, and ECOREAL, which raised capital for a Portuguese resort.
While the regulators also asserted that “each individual activity wasn’t necessarily an “act in furtherance” of a trade, it concluded that the marketing program as a whole was “instrumental and central” to the solicitation of investors.
Penalties for CoinLaunch
Given that the firm reportedly collaborated with the OSC to conduct investigations and also agreed to dissolve in the light of their failings, the regulatory body favored a reduced settlement fee to the tune of CA $52233 (appr. $39,500)
Further, the firm agreed and its CEO, Mr. Cohen, decided to cease from offering such services without due registration with the OSC. Mr. Cohen also undertook to delete the private keys for the tokens received as compensation from both BCZERO and ECOREAL.
In a similar report, Stmarket.co confirmed that the U.S SEC fined Canada-based blockchain entrepreneur, Alex Tapscott, and his firm NextBlock Global the sum of $25,000. The offense was failing to register with the U.S SEC even though the primary purpose of the firm was to pool public funds for investing in crypto startups.