U.S. and Canadian regulators filed parallel charges against a Canadian man and his companies, alleging that they defrauded investors in a US$51 million crypto offering.
The Ontario Securities Commission (OSC) filed allegations against an Ontario resident, Troy Richard James Hogg, and several companies — Cryptobontix Inc., Arbitrade Exchange Inc. and Arbitrade Ltd. — alleging that they duped investors by selling an unregistered digital token, and making false claims to investors about gold bullion backing the tokens.
At the same time, the U.S. Securities and Exchange Commission (SEC) also filed its own charges against Arbitrade, Cryptobontix and Hogg, along with other individuals, alleging that they perpetrated a pump-and-dump scheme involving the token.
The SEC alleged that Arbitrade and Cryptobontix falsely claimed that they had acquired US$10 billion in gold bullion that was going to be used to back the token.
Both regulators alleged that the scheme violated their respective securities laws.
Specifically, the OSC alleged that Hogg and his companies didn’t file a prospectus for the token offering, or obtain registration, also alleging that they defrauded investors “by diverting and depleting a significant amount of invested funds for purposes unrelated to the crypto security tokens, such as purchasing real estate and making payments to companies controlled by Hogg.”
The SEC charged the accused in the case with violating the antifraud and securities registration provisions of federal securities laws.
None of the allegations have been proven.
The first appearance in the case before Ontario’s capital markets tribunal is set for Oct. 20.