Former officers of Vancouver blockchain company admit misconduct

The former CEO and CFO of a Vancouver-based blockchain company has admitted misconduct to BC’s securities regulator.

Robert Earle Dawson and David Malcolm Alexander were officers of BLOK Technologies Inc., a Vancouver company listed on the Canadian Securities Exchange. Each man separately reached a settlement with the BC Securities Commission last week.

The settlements describe the two men’s roles in the abuse, both of which stemmed from a press release the company issued in June 2018.

The release announced that BLOK had raised more than $5.4 million through a private placement, but failed to disclose that the company owed more than $4.4 million in consulting fees.

The release indicated that the money raised would be used “to advance the company’s current blockchain investment projects, evaluate new blockchain opportunities and for working capital purposes,” according to the settlements.

It did not say that the vast majority of the funds – about 82 per cent of the total – were to be used for consulting the consultant’s fees, rather than for the stated purpose.

Alexander, BLOK’s former chief financial officer, admitted in the settlement that he knew the company “had already spent or owed the consulting fees” at the time the release was issued, and that by authorizing, permitting or accepting the issuance of the release, he had violated the province’s securities laws.

Likewise, Dawson, the former CEO, admitted in the settlement that he “knew or should have known” that BLOK had already spent or owed the fees, and thus was responsible for the same misconduct.

According to the settlement, none of the men have previously committed offenses in BC.

Both men agreed to resign from all positions they currently hold as board members or managers in companies subject to the Securities Act. Each of them also agreed to a ban on participation in the financial markets, but for vastly different periods of time.

Alexander agreed to be banned from market participation for three years and to pay a $25,000 fine to the commission.

Dawson agreed to a 14-year ban but is not required to pay fees to the commission.

“Dawson is an involuntary bankrupt and lacks the ability to pay a sum of money that would normally be included in any settlement,” his settlement said.

BLOK Technologies Inc. “is in the process of being dissolved,” according to the settlement.