B.C. crypto firm ordered to pay $3.3M for misleading investors, illegal securities distribution

Shaurya Kshatri · CBC News

· Posted: Apr 25, 2025 6:39 PM EDT | Last Updated: 11 minutes ago

A Vancouver-based institution that created and sold its ain cryptocurrency has been ordered to wage much than $3.3 cardinal to the B.C. Securities Commission (BCSC) aft admitting it illegally distributed securities and misled investors.

NetCents Technology Inc. reached a colony with the provincial fiscal markets regulator earlier this period implicit misconduct linked to the company's motorboat of the "NetCents Coin" successful 2017.

In a statement, the BCSC says the institution sold the coin to astir 500 investors successful B.C. and elsewhere, raising much than $3.3 cardinal without filing a prospectus — "a ceremonial papers providing details of an investment." 

"Without a prospectus, oregon an exemption from the prospectus requirement, NetCents illegally distributed securities," the securities committee said successful a connection earlier this week.

It says the funds, which were frozen successful November 2018 by BCSC's order, volition beryllium returned to affected investors. 

According to the agreement, NetCents made respective mendacious oregon misleading claims successful promotional materials and connected its website. This included suggesting that the coin was being managed by an autarkic non-profit entity called the NetCents Coin Organization.

The institution besides ran a abstracted website for a alleged non-profit called NetCents Coin Foundation that claimed to "administer, beforehand and support the Coin connected behalf of the assemblage of coin holders." 

But investigators accidental neither of those organizations existed and proceeds from income of the coin went to NetCents.

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NetCents besides falsely claimed successful aggregate November 2017 quality releases that its archetypal coin tranches had sold retired and that the coin's worth had quadrupled.

The BCSC colony statement also mentions a YouTube video posted earlier that twelvemonth wherever the institution claimed monthly revenues of $100,000, adjacent though fiscal disclosures showed little than that magnitude was made successful the full year.

In addition, the institution operated an online speech wherever users could commercialized NetCents Coin, but it failed to use for oregon person designation from the commission, a usurpation of the Securities Act.

The colony statement says NetCents has acknowledged each these facts arsenic portion of the settlement, which mitigated the consequences doled retired to it. 

Under the agreement, NetCents is prohibited from trading securities, acting arsenic a registrant oregon promoter, oregon engaging successful promotional activities connected behalf of others oregon itself.

Growing online concern frauds

Doug Muir, the BCSC's manager of enforcement, says the lawsuit highlights broader risks successful crypto investing and online fraud. He says determination has been "a ample surge successful the magnitude of online concern fraud."

"The commission issues alerts, sometimes several times a week, astir suspicious websites that haven't been registered to run successful Canada," Muir told CBC News.

"We're alert that the radical down these online concern frauds are not located successful Canada and there's grounds that a batch of them are being tally by organized transgression extracurricular Canada," helium said, adding that it's "extremely difficult" to way down the radical down it and clasp them accountable.

He says the NetCents lawsuit was antithetic due to the fact that the company was operating retired of B.C., allowing the committee to prosecute enforcement action.

However, investigations specified arsenic this take a batch of clip and effort, says Muir. 

"We necessitate a batch of accusation and not each of it is successful British Columbia," helium said. "These types of cases bash span borders. So we whitethorn beryllium required to get accusation done our chap regulators either successful Canada oregon astir the world."

Muir advises investors to beryllium cautious astir offers that committedness exceptionally precocious oregon guaranteed returns.

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"We privation radical to halt and deliberation astir the root of the information. Who's told them astir this investment? Are they being pressured to invest? And does thing conscionable not ringing existent for them?"

He encourages investors to sojourn the BCSC's acquisition site, investright.org, to larn much connected however to admit fraud.

There are astir 17 to 18 crypto trading platforms presently authorized to run with Canadian investors, and Muir says investors should lone usage those that are registered with the Canadian Securities Administrators. NetCents was not among them.