Vancouver men banned from financial markets over blockchain company misconduct

The B.C. Securities Commission logo in an undated file photo.

The former CEO and CFO of a Vancouver-based blockchain company have admitted misconduct to B.C.'s securities regulator.

Robert Earle Dawson and David Malcolm Alexander were officers of BLOK Technologies Inc., a Vancouver company that was listed on the Canadian Securities Exchange. Each man separately reached a settlement with the B.C. Securities Commission last week.

The settlements detail the two men's roles in the misconduct, both of which stemmed from a news release the company issued in June 2018.

The release announced that BLOK had raised more than $5.4 million through a private placement, but failed to disclose that the company owed more than $4.4 million in consulting fees.

The release indicated that the money raised would be used "for advancing the company’s current blockchain investment projects, evaluating new blockchain opportunities and for working capital purposes," according to the settlements.

It did not say that the vast majority of the funds – roughly 82 per cent of the total – would be spent on consulting the consulting fees, rather than for the stated purpose.

Alexander, BLOK's former CFO, admitted in his settlement that he knew the company had "already spent or owed the consulting fees" at the time the release was issued, and that by authorizing, permitting or acquiescing to the issuance of the release, he had violated the provincial Securities Act.

Similarly, Dawson, the former CEO, admitted in his settlement that he "knew or ought to have known" that BLOK had already spent or owed the fees, and thus was responsible for the same misconduct.

Neither man had any prior history of regulatory misconduct in B.C., according to the settlements.

Both men agreed to resign any positions they currently hold as directors or officers of companies subject to the Securities Act. Each also agreed to a ban from participation in the financial markets, though for vastly different lengths of time.

Alexander agreed to be banned from market participation for three years and to pay a $25,000 penalty to the commission.

Dawson agreed to a 14-year ban, but is not required to pay any fees to the commission.

"Dawson is an undischarged bankrupt and lacks the ability to pay a monetary amount that would normally form part of any settlement," his settlement reads.

BLOK Technologies Inc. "is in the process of being dissolved," according to the settlements.