A man convicted of securities fraud for allegedly misleading investors about the assets backing a crypto token has been granted leave to appeal that conviction by the Court of Appeal for Ontario.
Following an initial trial before the Ontario Court of Justice in 2023, Stephan Katmarian was acquitted of fraud, among other charges.
In that case, the Ontario Securities Commission (OSC) alleged that investors were misled when they were told that tokens issued by a company that Katmarian ran, Peblik Inc., were backed by its interest in the Thierry copper mine.
While investors in the tokens lost their investments, the court initially ruled that the OSC failed to prove that the investors purchased the tokens based on any particular false statement about the company’s stake in the mine, and it acquitted Katmarian of four alleged violations of the Securities Act.
The OSC appealed three of the acquittals to the Superior Court of Justice, which, in 2025, upheld two of the acquittals, but set aside the acquittal on the fraud charge — ruling that the lower court judge erred by requiring the regulator to prove that investors’ losses were caused by a reliance on a specific false statement.
The Superior Court found that, apart from that error, the findings of the lower court supported a fraud conviction — and, as a result, it overturned the acquittal and entered a conviction without ordering a new trial.
Katmarian subsequently applied for leave to appeal that conviction, citing the need to revisit two questions of law — the need for causation between misleading statements and investor losses, and the proper test for substituting a conviction on appeal without a new trial.
The appeal court has now denied leave on the first question, but granted leave to appeal the second question.
On the first issue, the court said it’s not necessary to revisit the question of causation as an element of fraud.
“The legal principles applied by the appeal judge are neither novel nor controversial,” it said. “Canadian law has long recognized that a conviction for fraud does not require proof that a victim suffered an actual loss as a result of the fraudster’s dishonest conduct.”
However, the appeal court did grant leave to allow an appeal to clarify the test for entering a conviction on appeal, in light of a Supreme Court of Canada decision in 2024 that addressed the limits on the ability of the Crown to appeal an acquittal (R. vs. Hodgson).
While that decision dealt with the prospect of substituting a conviction in a case involving prosecutions under the Criminal Code, the appeal court noted that, “the criteria for substituting a conviction for an acquittal on appeal are arguably different in the context of a prosecution under the Provincial Offences Act than under the Criminal Code.”
As a result, the appeal court concluded that it’s necessary to explore the question of whether that decision impacts the test for entering a conviction on appeal in a prosecution under the Provincial Offences Act.
“[I]t is essential in the public interest and for the due administration of justice for this court to determine the impact of Hodgson in the context of a Provincial Offences Act prosecution, and that, in the special circumstances of this case, leave to appeal on this issue should be granted on that question,” the court said.