A tiny Regina bitcoin startup, Dominion Bitcoin Mining Co., says it has been "exonerated" after facing allegations from Saskatchewan's securities regulator last year that it was soliciting investors without the proper paperwork.
In a decision dated Oct. 22, a three-member panel of the province's Financial and Consumer Affairs Authority (FCAA) ruled that no trading or other breaches of Saskatchewan's Securities Act occurred.
"It is the determination of the Panel that, notwithstanding the initially apparent validity of the allegations of the FCAA Staff, an offering of shares did not at material times exist, and the parties did not individually or collectively engage in any acts in furtherance of trading or in any breach of the provisions of the Act," the decision reads.
At issue were messages on Dominion's website that appeared to urge "sophisticated investors" to buy shares in a group of companies engaged in what is known as bitcoin mining, which is the process by which computers are used to create new units of the virtual currency.
"By taking part in our offering, you own a share in one of ten provincial companies that own Dominion. That share allows you an equal part in EVERY SINGLE BITCOIN WE EVER MINE," the site read, according to the decision.
At a hearing earlier this month, Dominion argued that the website was not live, and was supposed to be password-protected and encrypted, and was merely a "whiteboard" for the company's ideas. They also say they had no securities to sell. The panel agreed that the fact the website was accessible was "unintended," that no securities were ever sold or created, and that Dominion's three founders "had no clear picture of what an investor might be investing in."
Jason Dearborn, a former Saskatchewan party MLA and a co-founder of the company, said he plans to sue the Saskatchewan regulator for libel for making the allegations. He also says he is pursuing other legal action for alleged violations of the Charter of Rights and Freedoms that he says took place during interviews with investigators. He also alleges his company's website was accessible to investigators only because it had been hacked.
"These guys are just absolutely ridiculous," he said of Saskatchewan's securities regulator. " ... This is just a Mickey Mouse organization."
He said Dominion's plans to mine bitcoins, and engage in bitcoin trading are still under development but that it would probably not do any business in Saskatchewan.
However, he said the company has continued to mine bitcoin in the meantime. But Mr. Dearborn said Dominion had not sought out any external investors, and that it would operate in full compliance with securities laws.
He also said an anonymous informant, labelled "Person X" in documents filed with the securities regulator, spurred the launch of the investigation while one of Dominion's co-founders, Peter Voldeng, a former Saskatchewan Party president, was seeking his party's nomination for a seat in the Saskatchewan legislature.
A spokesman for the FCAA said the regulator had no comment.