A Vancouver-based company that violated securities rules by launching its own, unregistered cryptoasset, is paying $3.3 million in a settlement with the British Columbia Securities Commission (BCSC).
Under the settlement, the company, NetCents Technology Inc., admitted to illegally distributing securities and operating an unauthorized exchange, when it launched the NetCents Coin and sold it to investors, raising $3.3 million between September and December 2017.
According to the BCSC, the cryptoasset qualified as a security — and, by selling it without a prospectus, or an exemption, the company illegally distributed securities.
The regulator also said that the company misled investors in online postings, news releases and an online video.
To resolve the allegations, the company agreed to pay $3.3 million (those funds been preserved since 2018, under a regulatory freeze order) — which, the BCSC said, will be returned to investors who lost money as a result of the violations.
The company, which has been subject to a cease trade order by the BCSC since May 2021, was also permanently banned from trading and registration in B.C.
The BCSC noted that the NetCents officers and directors at the time of the misconduct are no longer involved with the company.
Earlier this year, the regulator discontinued proceedings against the company’s founder, Clayton Leigh Moore — who, the company said, unexpectedly passed away in January.