Canadian regulators have frozen the assets and activities of a blockchain firm and instructed investors to step forward. The AMF (Autorité des marchés financiers) issued a statement described as a “call to investors” regarding the company in question, Laboratoire Blockchain Inc, as well as three affiliated individuals.
Following the recent announcement that the Canadian federal government is auditing dozens of Bitcoin users, Quebec province is cracking down on activity in the cryptocurrency and blockchain industries.
The French-Canadian blockchain firm stands accused of violating securities laws. Three men are named in the injunctions: Jonathan Forte, Benjamin Forte, and Nicolas Barbasch-Bouchard.
The three defendants are prohibited from promoting and transacting in securities as per the initial court injunctions and are also unable to legally sell off or exchange any existing cryptocurrency funds, mining hardware, or related equipment or assets. The equivalent of an asset freezing, the move indicates potentially heavy penalties.
The Financial Markets further ordered the company to remove all online promotional materials advertising the company on Facebook and other social media platforms and websites to prevent further investment activity.
The AMF notes that it is currently conducting an investigation into this case. The regulator asks all people who invested money in Laboratoire Blockchain Inc or by using the services of any of the defendants to contact Sarah Abi-Khalil via 1 877 525-0337, 2644, not later than April 1, 2019.
The AMF asked investors to contact them by April 1st, but it is unclear what the exact goal of this is. First and foremost, it’s likely that the regulator simply wants to collect information in the firm being investigated.
Fundraising and advertising methods will come under sharp scrutiny, as the language used to describe the exact nature of the investment is important. The company marketed itself as providing blockchain solutions, and though the exact sum raised is undisclosed, it seems that Labatoire Blockchain may have offered what amounts to a portion of the company’s value in cryptocurrency in exchange for initial investment.
Unlike utility tokens which perform a key function in a cryptocurrency platform, this amounts to selling securities, is a highly regulated activity.
It’s still unclear in many countries whether the investors, as well as company teams, can be held liable for non-compliant securities transactions in cases such as these.
While no doubt the three men facing injunctions are in hot water should they be found non-compliant, the issue has been a major concern to the more forward-thinking ICO investors over the past two years as the lack of clarity in cryptocurrency regulation continues to hamper progress.
The French-Canadian province was in the news earlier this month when the government stated that the cryptocurrency mining industry did not offer value. The government did so to clarify that it was not interested in offering low-cost rates to miners through local hydro-electric facilities, denying a petition to create such an initiative.
Hydroelectric power is a cost-effective and renewable way to mine cryptocurrency. However, the government, whether due to the current crypto winter or a distaste for the industry in general, declined. Recently the hydroelectric utility provider, Hydro-Québec, stated that it would have to turn down certain cryptocurrency operations requests for power due to an inability to keep up with demand.