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 fine 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 its equivalent in bitcoin, an investigation by the Alberta Securities Commission found.

Article content

Cerato, which must also pay the $125,000 costs 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 that they would be refunded their principal investment and 75 percent of any profits after 90 days.

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

Article content

“A WhaleClub promotion suggested that an investment could double every few weeks, and Cerato told an investor that his capital would double within a short period of time,” the decision said.

Instead, the trading scheme failed to generate any profit and investors received only a small fraction of their initial investment, the investigation found.

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

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

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

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