As discussed in our previous post, the Financial Markets Administrative Tribunal (TMF) had provided clarity in the application of the “investment contract” criteria, first enunciated in Pacific Coast Coin Exchange v. Ontario Securities Commission and codified under article 1 of the Quebec Securities Act, CQLR c V-1.1 (QSA), by finding that PlexCorps’ project was an investment contract.

On appeal, the Court of Quebec affirmed in Lacroix c. Autorité des marchés financiers, 2020 QCCQ 1467, the TMF’s decision that PlexCorps’ project was an investment contract.


PlexCorps offered a cryptocurrency called PlexCoin along with financial services such as the PlexCard, PlexWallet and PlexBank. PlexCorps was run by Dominic Lacroix and, his spouse, Sabrina Paradis-Royer (the Appellants).

PlexCoin’s whitepaper stated that it targeted people across the world except in Quebec, Canada and the United States. Nonetheless, residents in all three jurisdictions had access to the presale of PlexCoin.

The Appellants were not registered to act as investment dealers under the QSA. They had neither issued a prospectus nor been exempt from the issuance thereof. Nonetheless, PlexCorps promised staggering returns of between 200% and 1,354% on its website and in its whitepaper.


An “investment contract” under article 1 of the QSA is comprised of four elements:

  1. contribution of capital or loan;
  2. expectation of profits;
  3. participation in the risk of a venture; and
  4. no required knowledge to carry on the venture or without obtaining the right to participate directly in decisions concerning the carrying on of the venture.

Appellants argued that conditions 2 to 4 of an “investment contract” were not satisfied.

Expectation of profits

Appellants argued that there was no expectation of profits. The promises of 1,354% return advertised in the PlexCoin whitepaper were mere indications of the resultant value of PlexCoin following market forces, irrespective of the influence of the Appellants. Further, Appellants argued that the purchasers of Plexcoin sought to facilitate commercial transactions, not to generate profits.

Justice Gervais of the Court of Quebec was unconvinced, holding that a plain reading of the PlexCoin whitepaper indicated that (1) projections of year-over-year price increases of PlexCoin and (2) the the anticipated steady increase in PlexCoin prices would involve the efforts and involvement of the PlexCoin management team. Accordingly, the Court upheld the TMF’s reasoning.

Participation in the risk of a venture

Appellants argued that PlexCoin was not a venture because the labour of its creators was not determinative of the value of the cryptocurrency. The prices of PlexCoin could fluctuate per market demand, irrespective of the efforts of the team developing the PlexCoin products.

Justice Gervais found that the TMF had made no reviewable error. The TMF had decided that the infrastructure proposed by the promoter of the project was key to its success. More specifically, the TMF differentiated PlexCoin from Bitcoin on the basis that PlexCoin was underpinned by a human organization where a few individuals exerted control of the project. Put simply, Bitcoin was a decentralized cryptocurrency, Plexcoin was not. This distinction, among others, meant that Plexcoin was a venture.

No required knowledge or right to participate

Appellants argued that PlexCoin’s whitepaper was only addressed to people with knowledge of cryptocurrency. The TMF, however, found that (1) a designated entity had exclusive control over the affairs of PlexCorps and (2) the PlexCoin whitepaper was expressly addressed to investors with little knowledge of cryptocurrency.  Again, the Court found no reviewable error, explaining that the TMF’s finding that the Appellants had total control of the venture was unassailable.


  • Courts are aware of the distinction between the centralized versus decentralized systems of governance for cryptocurrencies in deciding whether they constitute investment contracts within the meaning of the QSA; and
  • Quebec securities regulators adopt a substance-over-form approach in determining the existence of investment contracts.