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NextBlock CEO slapped with $25K fine in US over securities violation

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The U.S. Securities and Exchange Commission (SEC) has fined a blockchain entrepreneur $25,000 amid alleged breaches of securities law, echoing similar moves by Canadian regulators in recent days.

The regulator, which is responsible for overseeing the regulation and enforcement of laws around securities, fined entrepreneur Alex Tapscott after it was found that neither Tapscott nor his firm, NextBlock Global, had ever been registered with the SEC.

Both Tapscott and the company have been issued with cease and desist letters from the SEC, ordering a halt to actions that could further breach the Securities Act.

According to documents published by the regulator, Tapscott and NextBlock had falsely claimed involvement from prominent blockchain experts, as part of efforts to raise $16 million from investors.

The SEC noted: “These misrepresentations were part of the selling point of NextBlock’s fundraising effort: that NextBlock and Tapscott had access to, and unparalleled relationships with, opinion-makers, the best entrepreneurs, and the highest profile figures in the blockchain community. NextBlock and Tapscott knew or should have known that the statements to investors regarding these advisors were inaccurate.”

According to the SEC, the behavior amounts to a breach of securities laws, and comes as the second fine against Tapscott and the company in recent days.

The move follows a similar slapdown from the Ontario Securities Commission, which saw NextBlock Global fined $520,000, with Tapscott himself fined $148,000.

Per the SEC ruling, the latest round of fines were handed out in consideration of the amount previously fined, and by all accounts could have been larger in the absence of fined from their Ontario-based counterparts.

The case came to prominence in 2017, after the investment firm was found to have wrongly claimed the involvement of several high profile cryptocurrency industry names.

An expose by Forbes magazine made contact with four individuals said to be related to the project, all of whom said they had had no involvement with Tapscott or the investment firm. Since then, the firm has been forced to return funds to its investors off the back of these dubious promises.

The latest round of fines only add to these difficulties, designed to prevent the firm or its officers from engaging in similar conduct in future. The news serves as a further warning to crypto investors on the need to be cautious when taking promises at face value, especially from those soliciting investment in the cryptocurrency space. 

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