OSC Issues Investor Alert Regarding Unregistered Cryptocurrency Ventures

On May 18, 2018 the Ontario Securities Commission (OSC) issued a warning about five unregistered firms targeting Ontario investors that encourage them to trade or invest in cryptocurrencies.

The OSC stated that BTCReal, BitSerial, Hypercube Ventures LP, Cabin Coin OÜ, and BaapPay Inc. are not registered under Ontario securities laws and are not permitted to solicit investments or provide advice on investing in, buying, or selling of securities.

Furthermore, the OSC stated that Bitserial, Hypercube, CabinCoin and BaapPay have failed to comply with securities laws requirements that a prospectus, or alternatively, a prospectus exemption, be obtained prior to distributing securities to Ontario residents. The press release noted:

  • BTCReal manages btcreal.biz which claims to offer investment services for cryptocurrency-related instruments and foreign exchange instruments. BTCReal claims it can provide investors with a high return in a short period of time.
  • BitSerial operates bitserial.io which claims to offer investment opportunities in BTE Tokens in addition to an exchange program that swaps Bitcoin, Litecoin, or Ethereum for BTE Tokens.
  • Hypercube Ventures LP manages hypercube.vc, hypercube.fund, vnn.money and vnn.cash encouraging investors to buy “emission pools” with the purpose of generating “VNN cryptocurrency”.
  • CabinCoin OÜ operates cabincoin.com and cabincoin.exchange and is advertising an unregistered token sale for “CabinCoin Tokens”. The firm claims that the future value of these tokens will far exceed their initial price.
  • BaapPay Inc. manages the website baappaytoken.com and is also currently advertising an unregistered token sale.

This investor alert follows an early notice issued by the British Columbia Securities Commission on May 17, 2018 warning residents of the province to exercise “extreme caution” when considering whether to invest in cryptocurrency offerings, our summary of which can be read here. It also follows “Operation Cryptosweep”, where the OSC joined forces with over 40 other provincial and state regulators belonging to the North American Securities Administrators Association (NASAA) in warning investors about schemes involving cryptocurrency-related investment products.

Cryptocurrency offerings are relatively new and uncharted developments from a legal perspective, and can be risky for promoters and investors. Anyone involved in such offerings should seek appropriate legal advice.

For more information about our firm’s Fintech expertise, please see our Fintech group’s page.

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