The former director for a trio of companies that ran a crypto platform, which allegedly defrauded investors, is being sanctioned by the British Columbia Securities Commission (BCSC) for allowing the firms’ misconduct.
In an enforcement proceeding, the BCSC alleged that the three companies — Einstein Capital Partners Ltd., Einstein Exchange Inc., and Einstein Law Corp. — defrauded investors through the crypto platform that they operated.
The regulator alleged that, between September 2017 and November 2019, the platform accepted deposits from customers, but rather than safeguarding those assets, it used them to fund its own operations and to finance withdrawals by other clients.
The companies’ conduct amounted to fraud “because those uses of customers’ assets were not the ‘safe and secure method to buy, sell and store cryptocurrency on the platform’ that was promised to them,” the regulator said.
Now, it has settled with the sole director of those companies, Michael Ongun Gokturk.
In the settlement, the BCSC noted that, while Gokturk “did not misappropriate funds, engage in speculative investments with customers’ funds, or benefit from the misconduct of the Einstein Corporations” — as the companies’ director, he “directed, authorized, or acquiesced in their misconduct” and breached the Securities Act, as a result.
To settle the BCSC’s allegations, Gokturk agreed to pay $1 million to the BCSC, and to be permanently prohibited from registration, and acting as a director or officer. Gokturk was previously registered as an investment advisor, between August 2002 and March 2003, and as a salesperson between March 2003 and September 2006.
According to the settlement, Gokturk used approximately $1 million of his own money “to fund the platform and return some funds to users.”
The resolution comes ahead of an enforcement hearing against Gokturk and the companies, which was scheduled for March 9. The companies were dissolved in 2020.
The regulator noted that the fraud took place before the Canadian Securities Administrators (CSA) had determined that most crypto platforms need to be registered.