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Ontario tribunal rules against Arbitrade Bermuda

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Victoria Hall: the derelict remnant of the failed promise of Arbitrade (Photograph by Akil Simmons)

An Ontario Capital Markets tribunal in Toronto has ruled against a Bermuda company, related entities and the man behind them all, in an international trading and investment scandal.

In papers published this month, the three-woman panel ruled against Troy Richard James Hogg, Arbitrade Bermuda, Cryptobontix Inc and Arbitrade Exchange Inc, whom the Ontario Securities Commission alleged had promoted and sold crypto tokens issued by Cryptobontix, under the direction of Mr Hogg.

TJL Property Management Inc and Gables Holdings Inc, two other companies of Hogg’s, were not directly involved in the promotion and sale of the crypto tokens, but allegedly benefited.

Arbitrade infamously promised six years ago to create hundreds of Bermuda jobs in setting up its global headquarters here.

It led to the purchase of vacant Victoria Hall in Hamilton, but the office building has remained empty.

No counsel appeared for Mr Hogg and the related Arbitrade entities during the hearings before panel chair Andrea Burke and fellow adjudicators Sandra Blake and Cecilia Williams, which concluded in February.

The tribunal’s decision and reasons were published on Friday, and cited by Offshore Alert.

The Ontario Securities Commission had alleged that between May 2017 and June 2019, Mr Hogg, Cryptobontix, Arbitrade Exchange and Arbitrade Bermuda raised $51 million when they promoted and sold Unity Ingot tokens and, later, Dignity tokens to investors around the world.

The tribunal found they acted fraudulently by falsely representing to investors that the tokens were backed by gold and that gold was acquired and confirmed through an audit.

The tribunal also concluded the tokens were investment contracts and therefore securities under the Securities Act.

It ruled the respondents acted fraudulently by misappropriating funds raised from the sale of tokens for purposes other than those represented to investors.

It said Arbitrade Bermuda was among those that engaged in trading in securities without registration and without an exemption from registration, and distributed them without complying with the prospectus requirements.

It also said that Mr Hogg did not comply with Ontario securities law in relation to each of Arbitrade Bermuda’s breaches of the Act.

The ruling stated: “We do, however, find that Hogg is deemed under s. 129.2 to have violated Ontario securities laws for permitting, authorising or acquiescing in Arbitrade Bermuda’s breaches of Ontario securities laws.

“Despite finding Hogg was significantly involved with Arbitrade Bermuda during the material time, we do not attribute the breaches by Arbitrade Bermuda directly to Hogg, and Hogg alone.

“Given our factual findings about Hogg’s role with Arbitrade Bermuda, including his knowledge of and involvement in Arbitrade Bermuda’s breaches of the Act, we find that he permitted, authorised and acquiesced in such breaches.”

The tribunal has ordered the parties to register by next month so that a hearing regarding sanctions and costs may be scheduled.

Andrea Burke, Capital Markets Tribunal adjudicator, chair, in the Arbitrade case (File photograph)
Sandra Blake, Capital Markets Tribunal adjudicator in Arbitrade case (File photograph)
M. Cecilia Williams, Capital Markets Tribunal adjudicator in Arbitrade case (File photograph)

For more on the OSC v Arbitrade judgment, see Related Media

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