The creator of a new cryptocurrency made headlines last year for all the wrong reasons as the target of an investigation by the Autorité des marchés financiers (AMF), Quebec’s securities regulator, and of various court orders.

Dominic Lacroix fought back against the AMF and the judgment in Autorité des marchés financiers v. Lacroix, 2018 QCCS 3894 is compelling for two reasons.

First, it provides an insight into the powers of the receiver appointed at the request of the AMF.  Second, it holds that the target of an ongoing AMF investigation cannot avail itself of Charter rights such as the right to protection against self-incrimination when subpoenaed to testify and disclose documents by the receiver.

Lacroix v. AMF

Lacroix fell into the crosshairs of the province’s security regulator after raising money for PlexCoin, the cryptocurrency he created to compete against Bitcoin.  Quebec’s Superior Court, at the request of the AMF, named a receiver tasked with managing and securing his assets.  A receiver is a third party appointed by the court and is responsible for securing and selling assets in jeopardy for the benefit of creditors.  Lacroix challenged this appointment, contesting the receiver’s selection and conduct.

The power of the receiver

Referring to article 19 of the Act respecting the AMF, the judge in this case confirmed that the receiver has vast powers. Notably, a receiver has the right to compel someone to appear, to interrogate them, to force them to turn over documentation and to impose punishment in case of contempt of court. The rationale behind such significant empowerment is to protect the investors and, most importantly, the public’s confidence in the financial system and markets.

The target’s rights

Lacroix’s challenge was not, however, to the receiver’s inherent far-reaching powers.  Rather, he argued that the receiver’s subpoena, in requiring him to testify and to turn over documents, infringed on his Charter rights such as the right to protection against self-incrimination. In assessing this claim, the Court determined that a target at the investigation stage is not an accused as no formal charges have yet been laid by the AMF and therefore, the person is not entitled to Charter protection against self-incrimination. Consequently, Lacroix could not claim a violation of his Charter rights at this stage.

The judge nevertheless did leave the door open to Lacroix to raise his Charter rights later down the road, if and when charges are laid, to support a claim to exclude the evidence compelled by the receiver.

 

The author would like to thank Dan Ton-That, articling student, for his contribution to this article.