Canada Court Holds ICO Organizer in Contempt

An initial coin offering (ICO) organizer in Canada has been found in contempt of court following a new ruling from the Quebec Supreme Court.

The Autorité des marchés financiers (AMF), Quebec's financial regulator, published a statement on October 20 announcing that Dominic Lacroix and a related company, DL Innov inc., had allegedly ignored previous court orders aimed at preventing them from soliciting investors for "PlexCoin." PlexCoin, according to its official website, is a cryptocurrency based on ethereum.

The dispute between AMF and PlexCoin's backers dates back to earlier this year, when Canadian regulators issued prohibition orders to Lacroix, DLT Innov and several related businesses, restricting them from promoting a planned token sale for PlexCoin. The AMF said at the time that the parties were ordered to close any related websites and pull back any advertisements related to the cryptocurrency release.

Within days, however, the AMF would go on to issue a warning to investors about PlexCoin, stating that "the persons involved have apparently not complied with these orders" and that a planned ICO was still being organized.

In September, Canadian regulators issued further restrictions, including an order to the cryptocurrency's backers to not "dispose of any funds, securities or other property in their possession or entrusted to them."

According to the latest release, Quebec Supreme Court Justice Marc Lesage sided with the government in ruling that Lacroix and DL Innov continue to violate the past orders.

"In his decision, Lesage...emphasized that the evidence filed by the AMF demonstrates beyond any doubt that Dominic Lacroix and DL Innov Inc., representatives and alter ego of PlexCorps and PlexCoin, continued to solicit and propose to investors, directly and indirectly, to invest in the purchase of PlexCoin, a virtual currency, after orders issued by the Administrative Court of Financial Markets preventing them from July 20, 2017," the AMF wrote.

A hearing is reportedly set to take place next month regarding a penalty for the court contempt finding, according to the agency.

The dispute was ongoing when regulators in Canada published guidance on the blockchain funding use case in late August. At the time, the Canada Securities Administrators – an umbrella group for the country's regional markets watchdogs – said that it had found "many" ICO-derived tokens constitute securities.

Editor's Note: Some of the statements in this report have been translated from French.

Image via Shutterstock