SEC Charges Company Formed to Invest in Blockchain Technology and Its Former CEO
May 14, 2019
File No. 3-19164
May 14, 2019 - The Securities and Exchange Commission today announced settled charges against NextBlock Global Ltd., a Canadian corporation formed to invest in blockchain companies and related digital assets, and its co-founder and former CEO, Alex Tapscott.
According to an SEC order, NextBlock and Tapscott made material misrepresentations in connection with a securities offering in 2017 that raised $2.4 million from U.S. investors and $16 million overall from more than 100 investors. The SEC's order found that, as part of NextBlock's fundraising efforts, NextBlock and Tapscott falsely represented to investors that as many as four prominent individuals in the blockchain community were serving as advisors to the company. Following press reports in late 2017 that disclosed the misrepresentations for the first time, NextBlock initiated court proceedings in Ontario to wind up the company and return offering proceeds to investors.
The SEC's order instituting settled cease-and-desist proceedings found that NextBlock and Tapscott violated the antifraud provision of Section 17(a)(2) of the Securities Act of 1933. NextBlock and Tapscott agreed to the entry of a cease-and-desist order, and Tapscott agreed to pay a $25,000 civil penalty. NextBlock and Tapscott also have entered into a settlement agreement with the Ontario Securities Commission.
The SEC's investigation was conducted by Gregory C. Padgett and supervised by Adam S. Aderton of the Asset Management Unit, and assisted by Marlee Miller and Bonnie Kartzman of the Office of International Affairs. The SEC appreciates the assistance of the Ontario Securities Commission.