Bryan Friedman

The Ontario Securities Commission appealed the acquittal of Stephan Katmarian on four counts of securities violations related to the promotion of Peblik Inc., a cryptocurrency token purportedly backed by the Thierry Mine.

The trial judge acquitted Katmarian on all counts.

On appeal, the Superior Court allowed the appeal on Count 1 (fraud), finding the trial judge erred in law regarding the element of deprivation by requiring proof of detrimental reliance rather than risk of deprivation.

The Court dismissed the appeals on Counts 2 (misleading statements to the Commission), 3 (unregistered trading in securities), and 4 (distribution without prospectus).

The Court entered a conviction on Count 1 and remanded for sentencing.

The Ontario Securities Commission prosecuted the defendant, a director of a startup company developing a blockchain token backed by a mining asset, for securities fraud, making misleading statements to the OSC, unregistered trading, and illegal distribution of securities.

The court found that while misrepresentations were made in some corporate materials regarding the company's interest in a mine, the investors did not rely on those materials, negating the deprivation element of fraud.

The court also found the defendant's statements to the OSC were factually correct, he was not in the business of trading securities, and the distributions he authorized fell within the private issuer exemption.

The defendant was acquitted on all counts.