By NIALL MCGEE
Tuesday, November 7, 2017
Alex Tapscott's blockchain fund has cancelled plans to go public, days after misrepresentations were uncovered in marketing materials sent to potential investors.
In a release on Sunday, NextBlock Global announced it is "no longer doing a go-public transaction," and said it was in the process of returning funds to investors who had already invested in the cryptocurrency investment vehicle.
The fund, which was planning to go public through a reverse takeover of a TSX Venture-listed shell company, was aiming to raise an additional $100-million to invest in public and private early-stage blockchain companies. The fund had already raised $20-million in an earlier financing round in the summer.
Last week, Forbes revealed that four people who had been named in marketing materials as advisers to the fund had not agreed to do so.
One of those named advisers, Vinny Lingham, chief executive of U.S.based blockchain startup Civic, told The Globe and Mail that Mr. Tapscott used his name falsely in materials sent to numerous investors. Two others also told The Globe they had not agreed to advise the company and that NextBlock Global also used their names without their consent.
The Globe also reported that Mr. Tapscott's fund incorrectly attributed a picture of Australian novelist Luke Carman in marketing materials to Dino Angaritis, one of the fund's named advisers. Mr. Carman said he'd never even heard of the blockchain fund, and was appalled his image was used without his knowledge. Meantime, Mr. Angaritis told The Globe that he had requested his image not be used at all in investor documents.
"We have stumbled in our efforts to take our company public and we will work hard to rebuild the trust of those we have disappointed," NextBlock Global said in the release on Sunday.
Mr. Tapscott, who is CEO of NextBlock Global, did not respond on Monday to a request for comment.
In an e-mail to The Globe, the Ontario Securities Commission (OSC) said, as a matter of general policy, it is "unable to confirm or comment, on the existence, status or nature of any complaint, review or investigation."
Two investment banks, CIBC World Markets Inc. and Canaccord Genuity Group Inc. had been attached to the NextBlock Global financing as underwriters, but both withdrew their support after the misrepresentations came to light. On Monday, in an internal e-mail to employees, Pat Burke, president of capital markets Canada with Canaccord, wrote that the dealer's decision to walk away was because of "ongoing developments" around the transaction. CIBC did not provide an explanation for its withdrawal on Friday.
The news about the aborted public offering also added to the selling pressure on another big name in the blockchain sector. On Monday, shares in Vancouver-based HIVE Blockchain Technologies Ltd. closed down more than 15 per cent on the TSX-Venture Exchange, having lost 12 per cent on Friday. HIVE, which is backed by well-known mining financier Frank Giustra, went public in a reverse takeover in September. Since its debut, HIVE's stock price had skyrocketed, advancing more than 1,600 per cent over a period of about six weeks, with its market capitalization recently peaking at $1.25-billion.
HIVE, which has not yet posted a quarterly earnings report, did not respond to a request for comment on Monday on whether the bad press over NextBlock Global was affecting trading in its stock.
Before transitioning to blockchain, Mr. Tapscott worked at Canaccord as an institutional salesperson between 2008 and 2015. After he left the independent investment bank, he coauthored a book on blockchain technology with his father.