ASC sanctions mastermind of failed bitcoin investment scheme

Article content

An Alberta man who illegally sold investors on a failed cryptocurrency scheme that promised spectacular returns has been ordered to pay a $40,000 penalty and banned from trading for at least eight years.

Article content

Jan Gregory Cerato raised at least $200,000 from 16 investors who paid a minimum of $10,000 or the equivalent in bitcoin, an Alberta Securities Commission investigation found.

Article content

Cerato, who must also pay the $125,000 cost of the ASC investigation and related hearings, was not registered with the ASC or authorized to sell securities.

An ASC panel heard he launched his WhaleClub team in December 2017 through online forums and in-person workshops, targeting investors new to cryptocurrency trading. Club members had to contribute at least $10,000 and were told they’d be repaid their principal investment and 75 per cent of any profit after 90 days.

Cerato did not file a prospectus for WhaleClub and failed to explain the risks to investors, the ASC said.

Article content

“One WhaleClub promotion suggested that an investment could double every few weeks, and Cerato told an investor that his capital would multiply tenfold in a short period of time,” the decision states.

The trading scheme instead failed to generate any profits and investors received only a small portion of their initial investment, the investigation found.

“WhaleClub members were exposed to significant financial risks that they did not fully appreciate when they invested,” according to the decision.

Cerato told investigators his WhaleClub was “an experiment with cryptocurrency” and a “casual situation,” it said.

The hearing panel noted Cerato, who also uses the surname Strzepka, is a significant risk to investors and that he “accepted little or no responsibility or regret and instead blamed others and exhibited contempt towards those who were harmed by his actions.”

The investigation found he sent threatening messages to at least three investors ahead of the ASC hearing.