Ontario’s securities regulator is pursuing $8.5 million in fines and the repayment of US$51 million in ill-gotten funds from former Grand Bend businessman Troy Hogg and his affiliated companies, after they were found guilty of charges under the province’s Securities Act. This case, deemed by the Ontario Securities Commission (OSC) as the largest cryptocurrency fraud it has encountered, highlights the growing scrutiny over fraudulent schemes in the digital currency sector.
Sweeping Penalties Sought for Fraud
The Ontario Capital Markets Tribunal heard on Monday that the OSC is seeking severe penalties against Hogg, who previously owned local businesses Gables and the Colonial Hotel, as well as several of his corporations. The case centres on a fraudulent cryptocurrency offering that raised over US$51 million between May 2017 and June 2019.
OSC counsel Alvin Qian made the commission’s stance clear during the tribunal proceedings. “In our view, this is the largest crypto fraud that this tribunal has ever heard,” Qian stated. He added, “The respondents fraudulently raised over US$51 million from investors around the world. At the centre of these frauds was Mr. Hogg.”
The OSC is requesting $2.5 million in fines against Hogg himself, which are included in the total $8.5 million sought in penalties. Additionally, the regulator is pushing for a lifetime ban on Hogg and his companies from Ontario’s securities markets. Beyond the fines, the OSC aims to reclaim the US$51 million allegedly obtained through violations of Ontario’s securities laws.
Hogg’s Absence and Regrets
In a notable turn of events, Hogg did not attend Monday’s tribunal hearing. In an email sent to the tribunal registrar on Friday, he announced his intention to skip the proceedings, citing the significant toll the case has taken on his personal and professional life.
“I regret ever listening to the men that convinced me to do this and I am so sorry for anyone hurt by the actions chosen,” Hogg wrote in the email, portions of which were read aloud during the hearing. His message referenced his financial struggles and hinted at the possibility of bankruptcy, claiming it would take a lifetime to pay off the steep penalties he faces.
However, OSC counsel Qian urged the tribunal to give little weight to Hogg’s assertions, pointing out that they were uncorroborated. The tribunal reserved its decision on the sanctions and penalties.
Fraudulent Cryptocurrency Offering
The fraud involved Hogg and his companies — Cryptobontix, Arbitrade Inc., Arbitrade Ltd., TJL Property Management Inc., and Gables Holdings — and revolved around the sale of a digital token called Dignity, which they falsely claimed was backed by gold. The fraudulent sale of these tokens raised about US$51 million, with much of the investor funds misappropriated for personal benefit, according to the OSC.
Qian described the fraud as “particularly egregious,” noting that the respondents “lied to investors” and siphoned the funds raised for their own use. “This fraudulent offering was simply a scam,” he told the tribunal.
In addition to the hefty fines, the OSC is also seeking more than $667,000 in legal costs from Hogg and his corporate entities.
Ongoing Legal Battles
The legal issues surrounding Hogg and his companies do not end in Ontario. Cryptobontix and Arbitrade, along with other individuals and entities, are also facing separate charges brought by the U.S. Securities and Exchange Commission (SEC). These proceedings, which address related allegations of securities fraud, have been adjourned until April 2025.
As the Ontario Capital Markets Tribunal deliberates on the sanctions and penalties, this case serves as a stark reminder of the risks inherent in the cryptocurrency sector, especially when false claims and fraudulent schemes are at play.
