The Ontario government has applied to seize a luxury $3.6 million condo on the 52nd floor of a building in downtown Toronto. The court application stated that it was part of a lavish lifestyle through a multi-million dollar cryptocurrency fraud scheme.
Even as regulators are becoming more assertive in the booming digital currencies sector, observers say fraud is still rising.
Angela Dennis of the Better Business Bureau told CTV News Toronto “I think part of what is enticing to people is that this is a decentralized currency and not well regulated. That attracts some people. And along with that comes high risk.”
Kevin Hobbs and a partner are suspected to have raised $33.7 million at their Vancouver-based company, Vanbex, promoting a cryptocurrency called “Fuel” and what they called innovative “smart contracts.”
The court application stated that the money went into real estate purchases in Toronto and Vancouver, two Range Rovers, and to lease a 2018 Lamborghini Aventador.
The court document claims Hobbs gambled $1.8 million in B.C. casinos, and alleges they promised smart contracts that never externalized.
The application also stated that “the Attorney General alleges that Kevin Hobbs purchased the condominium with funds he defrauded from investors of his company, Vanbex Group Incorporated.”
CTV News Toronto reported that Hobbs denied any wrongdoing on his part, and says investigators don’t understand the company’s cryptocurrency product.
“The authorities were misled and have failed to conduct a fair and open-minded investigation. Instead, it has become a smear campaign. We are litigating the matters,” Hobbs said. “We expect to be vindicated by a judge, once he or she knows the true facts.”
Lisa Cheng, his named partner in the claimed that Hobbs are no longer partners.
“My interest today is ensuring the people who supported this vision … I want to return what I feel is theirs,” she said.
The RCMP confirmed that its investigation is ongoing, but the charges have not been proven in court.
They forwarded the case to civil forfeiture offices in both B.C. and Ontario. That’s a way governments can sue to recover what they believe are assets gained through a crime.
The condo, owned by Hobbs, was sold in August for $3.61 million. The judge is ordering the money be frozen until the matter can be dealt with at a trial.
The interest in cryptocurrency investments is skyrocketing. Canadians are constantly falling victim to fraud as well.
According to the Canadian Anti-Fraud Centre, $20.7 million was lost across the country in alleged cryptocurrency fraud in 2020, rising to $35.6 million lost in just eight months in 2021. This is likely because the of the pandemic and we are entering a virtual world.
The Ontario Securities Commission is suggesting that cryptocurrency operations align themselves with securities law, believing that regulating it as a security will better protect investors.
In March, the OSC set guidelines for trading platforms.
The OSC has been in discussion with 20 crypto trading platforms.
Four platforms are registered or have received conditional approval to operate in Ontario:
- WealthSimple Crypto,
- Netcoins, and,
- Simply Digital Technologies Inc (Coinsmart).
Dennis said the sector has a long way to go before investors can fully trust it.
“There are legitimate platforms and not so legitimate ones,” she said. “Do the research. Look up to see if the information they are providing you is accurate. If they’re suggesting you’re going to make a lot of money fast, you need to start asking questions.”
This article was originally sourced by CTV News – Toronto