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Blockchain entrepreneur Alex Tapscott has reached a settlement with Ontario’s securities watchdog after the regulator investigated allegations that he created misleading marketing materials when raising money.

In a statement of allegations made public Thursday, the Ontario Securities Commission (OSC) said Mr. Tapscott and his venture capital fund, NextBlock Global Limited, made statements in marketing materials that were “misleading or untrue or did not state a fact that was required to be stated or that was necessary to make the statements not misleading.” Details of the settlement are not yet public.

The fund, which was aiming to invest in public and private early-stage blockchain companies, raised $30-million in a private placement during the summer of 2017 and had planned to go public through a reverse takeover of a TSX-listed shell company that fall. The go-public effort was cancelled in November, 2017, after both CIBC World Markets Inc. and Canaccord Genuity Group Inc. withdrew as underwriters.

A hearing will be held at the OSC on Monday to determine whether or not the settlement between Mr. Tapscott and the regulator should be approved.

Mr. Tapscott declined to comment on the matter.

Allegations of Mr. Tapscott’s misleading marketing first surfaced on Nov. 1, 2017, when Forbes magazine reported that four individuals NextBlock named as advisers in slides for its investor deck had never agreed to act in those roles. In one instance, an individual was never even approached by NextBlock about a business relationship.

All four individuals were prominent figures in the blockchain industry, and the securities regulator said in its statement of allegations that representing them as advisers to NextBlock was “untrue and misleading.”

“Investors in the first private placement that received the investor decks containing these misleading statements were deprived of the opportunity to make a fully informed investment decision,” the statement of allegations reads.

One of the four – Vinny Lingham, CEO of U.S.-based blockchain startup Civic Technologies – previously told The Globe and Mail that when he confronted Mr. Tapscott about the matter over e-mail, Mr. Tapscott initially denied using his name.

"I got an e-mail from him saying ‘No you’re not an adviser. You never were. It’s very weird.’

“Then I say, ‘But I’ve seen the deck and my picture is in it,’” Mr. Lingham said.

Mr. Tapscott then told him that his photo was only used in an early version of the investor deck that wasn’t widely circulated, Mr. Lingham said.

The OSC alleges that investor slide decks containing misleading information were provided to more than 100 potential investors in a private placement that raised roughly $20-million from 113 accredited investors.

The Globe also previously reported that NextBlock used an incorrect photo of one of its advisers in its marketing material. In a NextBlock Global document circulated to prospective investors, Dino Angaritis – a man described in the deck as a "prolific angel investor” and the CEO of a company called SmartWallet – is listed as one of the advisers to NextBlock. But The Globe confirmed that the photo that appeared alongside Mr. Angaritis’s description was of Luke Carman, a fiction author in Australia.

Mr. Angaritis had agreed to advise the company privately, but asked for his picture to be left out of the document, he told The Globe at the time.

NextBlock has since returned investors’ money, including profit generated by a significant increase in the value of the fund’s investments, according to the OSC’s statement of allegations.

Investors in the first private placement received their initial investment of $20-million, plus an additional $28-million, representing a 140-per-cent increase on their investment.

Mr. Tapscott – who, before transitioning to blockchain was an institutional salesperson at Canaccord Genuity – also voluntarily declined roughly $3-million in carried interest that he was entitled to based on NextBlock’s profit, according to the OSC.

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