Ontario’s securities regulator, the Ontario Securities Commission (OSC), is pursuing substantial financial penalties against Troy Hogg, a former Grand Bend businessman, following his conviction for involvement in a fraudulent cryptocurrency scheme that defrauded investors of over $51 million. During a hearing on September 30, OSC counsel outlined a comprehensive request for $8.5 million in fines, alongside the recovery of the full amount obtained through violations of the province’s securities laws.
Hogg, known for previously owning the Gables and the Colonial Hotel, stands at the centre of what OSC counsel Alvin Qian described as “the largest crypto fraud that this tribunal has ever heard.” The scheme, which involved a fraudulent crypto asset known as Dignity, falsely claimed to be backed by gold. The tribunal found that Hogg and his associated companies, including Cryptobontix and Arbitrade Inc., misappropriated significant investor funds raised through the sale of these tokens between May 2017 and June 2019.
The OSC is seeking a $2.5 million fine against Hogg as part of the total $8.5 million penalty and is also requesting a lifetime ban from the province’s securities markets for him and his businesses. The demand to repay the $51 million in ill-gotten funds highlights the severity of the case, with Qian asserting that Hogg’s actions involved lying to investors about the backing of the tokens and misusing their funds. “In reality, a majority of the investor funds raised from the sale of those tokens was misappropriated by the respondents for their own benefit,” Qian stated.
Hogg did not attend the hearing but sent an email to the tribunal registrar on September 27, indicating that the proceedings have had a significant impact on his family and career prospects. In his correspondence, he expressed regret for his involvement, stating, “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’s email also highlighted his fears about bankruptcy and the lifetime burden of the financial penalties he faces.
During the hearing, Qian urged the tribunal to consider Hogg’s unverified claims with caution when determining an appropriate penalty. The tribunal has since reserved its decision on sanctions and penalties, with expectations for a ruling in the near future.
The Ontario Capital Markets Tribunal previously found Hogg and his companies guilty of multiple charges under Ontario’s Securities Act, including fraudulently misappropriating funds and misleading investors about the asset’s gold backing. The tribunal’s findings detailed a pattern of deceit, where Hogg and his associates allegedly told investors that their funds were being used to purchase cryptocurrency mining rigs, while in reality, they misappropriated much of the raised capital for personal gain.
In addition to the penalties sought by the OSC, Hogg, Cryptobontix, and Arbitrade are also facing separate charges from the U.S. Securities and Exchange Commission (SEC). The proceedings concerning these charges have been adjourned until April 2025, adding further complications to an already convoluted case.
As the tribunal deliberates on the appropriate course of action, the fallout from this case serves as a stark reminder of the risks associated with cryptocurrency investments and the importance of regulatory oversight in protecting investors.