A panel of the Ontario Securities Commission (OSC) has approved a settlement agreement with CoinLaunch Corp, a firm that operated in the cryptoasset sector, for engaging in and holding itself out as engaging in the business of trading in securities without registration, according to a release by the OSC.
CoinLaunch, which chose to wind down its operations rather than initiate a registration process, will pay an administrative penalty of $30,000 and disgorge $12,223.06. The firm’s former CEO, Reuven Cohen, has also agreed not to become or act as a director or officer of any company that engages in trading securities, without the applicable registration or an exemption under Ontario securities law.
“If you are operating in the cryptoasset sector in Ontario, you must take steps to investigate and understand your obligation to comply with registration requirements under securities law,” said Jeff Kehoe, director of enforcement at the OSC, in the release. “Businesses that choose to ignore this obligation should consider themselves on notice and will face more severe consequences.”
Between March 1, 2018 and September 30, 2018, CoinLaunch advertised and provided services to issuers of cryptoasset tokens, which included helping clients administer and promote cryptoasset token offerings. Taken together, these services constituted acts in furtherance of trades and required registration under Ontario securities law.
Upon becoming aware of the registration requirements, CoinLaunch did not make use of the supports the OSC has in place to foster Ontario’s emerging cryptoasset sector, according to the OSC. For example, the firm did not engage with the OSC to obtain relief from registration requirements or seek registration. The OSC noted that during the investigation, CoinLaunch cooperated with staff and took steps to remediate its conduct, including removing websites it had created for crypto-asset token issuers and ceasing its business relationship with token issuers.