$200 000 USD
DESCRIPTION OF EVENTS
"Jan Gregory Cerato, also known as Jan Strzepka, (Cerato) is an individual and resident of Calgary, Alberta. Cerato used the name “Whale Club” to raise capital from the public. He held out Whale Club to be an investment group. Whale Club was not an incorporated entity nor a registered tradename."
"[M]y name is Jan Gregory, I am a Canadian who grew up in Calgary, Alberta a somewhat successful father, friend and entrepreneur who decided one day many years ago to embrace the future of bitcoin." "This incredible journey all started for me back in 2012 when many citizens didn’t consider bitcoin a true currency, saying “There’s no central bank to regulate it; it’s only digital and functions completely peer to peer!” I truly believe in the decentralized individual control of finances, just like I have believed in the decentralization of the web since the early 90s." "In five years, I see myself in the Bahamas, spending half the year on a boat, docking at different beaches and checking out exotic locations while maintaining the business online. The other half of the year I would spend working in Calgary."
"By mid October 2017, my Bitcoin workshops had taken off like wildfire, every Thursday night was getting busier and busier, the word on the street had gotten out all across western Canada that Jan Gregory was the new Crypto expert and 1000’s of people came to learn how to do crypto currency properly from all over the place." "You can find Cerato at his weekly Bitcoin Workshops, hosted at ZEN 8 in Calgary." "Cerato likes to host Investment and Crypto Pitch Event Parties with his finance Angie Coombes as a musical distraction." "They lure you with a super duper, unbelievable creative pitches, talk you out of your $ & crypto."
"Now its December 2017 bitcoin price is climbing beyond anything before, more people than ever are coming into my life and teachings, it was a very very busy time for me. Scott is hanging around everyday now and decides what type of business he wants to do and then proceeds to include myself, Alex, Dani & Kirk in his plans and then begins to create a Pitch deck of his idea/plan. I realize I know nothing about the investing world, I come from marketing and neither do the rest of the guys but we all trust Scott to do his diligence. Well that was a big mistake,"
"Almost an hour into [a] meeting, I heard Jan Cerato say from the back, “I’ll give $100 in bitcoin to everyone right now!” Heads turned, and all eyes were on Cerato, the bald, bespectacled cryptocurrency promoter in the slogan T-shirt and baseball cap."
"There were about 20 people in that Calgary boardroom that day in the spring of 2018 discussing an upcoming conference, the Bitcoin Rodeo. I couldn’t get a seat at the table, and Cerato, who arrived later than me, had to stand. On hearing his offer, the room surveyed him, perhaps as they would modern art that they didn’t understand. Then they went back to their conversation."
"But afterward, people swarmed Cerato like hungry children. At one point, he had to add a caveat: he would only give bitcoin to people who had not owned cryptocurrency before. I can’t remember what exactly he exclaimed after each transaction, and it seems neither can any others. Their recollections include, “Yahoo!” “Booyah!” and “Woohoo!” But there is no question Cerato shouted something to express his excitement each time he gave bitcoin away, as he raised a fist into the air amid all the eyes upon him."
"I had shared bitcoin with a few others over the years and never really made a big deal about it, until Aug 2017 when a long time acquaintance Chris called me out of the blue and told me that bitcoin was going to explode and that I should help his friend Wendy and her husband Alex share this crypto company they are part of, apparently they owed Chris a bunch of money and Chris thought I could help them get the word out better since I’m a marketing expert and he could get his loan paid back by the couple faster and quicker. So I said sure and agreed to meet with Wendy and Alex to hear what they were doing and what they had to offer."
"With a background in marketing, he held weekly cryptocurrency meetups at a local gambling house called Cowboys Casino, where he often promoted all manner of products and services. In an oil-dominated economy still reeling from the bust, 20 to 30 people would go every week to those events. “We had a million ideas,” he said at one meetup, “right down to, like, bitcoin underwear, OK?”"
"Scott starts to promote this un-approved pitch deck and shows it around on his Linkedin which becomes very negative because he garners the future attention of this low level Securities Commission investigator who is well known for potentially doing zero fact checking, zero dilligence, believes the fabricators and their fake claims/lies, uses criminal tactics at fabricating his cases, ruining peoples businesses, their family name and livelihood which has inturn pushed many of Albertan men into suicide."
"The most prominent project associated with Cerato was what he called a “whaleclub” pooled investment service. He would later say that he had not been in charge, but he had promoted the project, dealt directly with investors, distributed their money to his whaleclub team to trade and frequently issued instructions. And those whaleclub investors, he said, “trusted me with a million bucks, and they trust me even with more.”"
"Meanwhile Scott is struggling to have anyone take him seriously in the finance world he comes up with another bright idea where he start’s a small “private investment club” and he tells us we can grow the clubs funds with crypto trading. This is when the so-called “whale club” where I am framed negatively in the news, was born out of Scotts desperation. He convinced Dani, Kirk and Alex that they could help him trade and grow the funds, and he wanted me to help market this to my people so they could have some funds to work with. At the time it all sounded ok, but what I didn’t know is that Scott had no license and had other plans from the start and was continually deceiving us all since day one. Scott called 3 of his key friends Ryan, Wayne & Todd and convinced them all to buy a bitcoin each (around $10K) at the time to join his whale club. Scott had his friends that I never met write cheques to my Stylewerx marketing company and told me that Dave can supply his guys the bitcoins. At the time I was blown away he had 3 guys and $30K going in the bank already, this made me trust Scott and his ideas, so I began to promote this to my friends. Within a short time we had 20 friends in Scotts whaleclub all with roughly $10k or a bitcoin each. Scott was the only one who never put any of his own funds in his own club which later i realized was weird. We had around $200k to work with and Scott suggested we distribute $50K to each of the guys Scott, Kirk, Dani and Alex. I took Scotts lead in the management of all this and helped make that happen with the help of Dave, we were able to convert about 19 bitcoins for Scotts whale club totalling $190K like the news articles depict. I remained the person my people trusted and began to oversee Scott and the guys so we could report to the members on a monthly basis. (see the copies of the original mailed docs from the Securities Commission to Scott and see the detailed diagram showing the flow of funds and Scott’s mis-management where he is still technically holding my funds and others without a license and somehow wasn’t mentioned in the case or the news etc. it’s all smells fishy and seems surreal at the same time)"
"Jan Cerato reminds you don’t settle for average. Bring your best to the moment. Then whether it fails or succeeds, at least you know you gave it all you had!"
"Cerato solicited members of the public to invest in a fund, referred to as the "Whale Club," that would pool investor capital to buy, trade and hold cryptocurrencies in order to generate a profit." "Starting in December 2017, Cerato promoted the WhaleClub as an investment opportunity at the weekly Meetups. One investor witness said that Cerato mentioned the WhaleClub investment opportunity during the Meetups, and others indicated that he approached individual attendees after his Meetup presentation to discuss the WhaleClub. The WhaleClub was promoted as an investment similar to a mutual fund, in which unsophisticated subscribers could pool their funds to trade Bitcoin and other cryptocurrencies." "Cerato began issuing Whale Club investments in December 2017, raising at least $190,000."
"According to the notice, Cerato did not give any documents or receipts to buyers as part of the sale." "In response to legal concerns at the time, Cerato told his team in a private whaleclub group chat: “We are good as far as the legal confines of these rules right now! … I had my aunty (sic) who is a paralegal get me the docs and read the rules for me.” But chat logs, shown to me by two separate sources with access to them, reveal that, at least once, Cerato seemed unaware of even basic information such as to which investor some money in the club belonged."
"Cerato conveyed very optimistic projections for WhaleClub returns to prospective investors (including that funds might double "a number of times" in the first 90 days) but he rarely, if ever, discussed the risks of investing in the WhaleClub. The only apparent requirement was a minimum investment of $10,000, either in fiat currency or the equivalent in Bitcoin. Cerato set a January 2018 deadline to enter the WhaleClub, although some people invested with Cerato after that deadline."
"The evidence was that he raised $200,000, and perhaps more, from at least 16 investors. Staff were told that there were approximately 33-35 WhaleClub investors, which corresponded to statements in evidence indicating as many as 34 investors had contributed approximately $250,000 to the investment pool. Participation in the WhaleClub was mostly offered to Meetup attendees, although some investors heard about the WhaleClub elsewhere." "None of the WhaleClub investors made a profit on their investment."
"Consistent with investor witness evidence, Cerato told Staff investigators that the majority of investors dealt only with him, they were not involved in trading the invested funds and their only participation was as investors with "zero" say in what or how to trade. He also said that investors were told there was a four person trading team who would trade cryptocurrencies, that investors were not asked to fill out any documents (such as a subscription agreement) before investing in the WhaleClub, and they were not asked questions about their financial circumstances. Cerato also confirmed that he controlled the keys to the various cryptocurrency wallets that received, pooled and repaid investor funds, but was aware that some investor funds were still held in a Bitcoin wallet controlled by Fleurie."
"We held a ten-day hearing, during which we received documentary evidence and heard testimony from eight witnesses. Cerato was represented by counsel throughout. Cerato did not testify in the hearing but transcripts from his compelled investigative interview with Staff were admitted into evidence. We also received written and oral submissions from the parties on thet constitutional questions in the Charter Notice and the allegations in the Notice of Hearing. Wet consider first the Charter Notice in light of the remedies sought, which include a stay of proceedings."
"There was relatively little disagreement about the facts that gave rise to Staff's allegations. Investors provided money to Cerato knowing that their funds would be pooled and used to trade cryptocurrencies. No prospectus was filed with the ASC for these investments. The fundamental issues were whether there was a distribution and whether the investments fell within the private investment club exemption in section 2.20 of National Instrument 45-106 Prospectus Exemptions."
"Staff's position was that Cerato traded securities by selling agreements to invest in the WhaleClub, for which he received at least $10,000 from each investor, either in fiat currency or in Bitcoin. Staff also argued that Cerato engaged in acts in furtherance of a trade through his promotion of the WhaleClub at Meetups and in Telegram posts, and by soliciting members of the public to invest."
"The proceeding will now move into a second phase to determine what, if any, orders for sanction or cost-recovery ought to be made against Cerato. The timing of the next steps will be set after hearing from the parties." "Staff and Cerato are each directed to inform one another and the Registrar, in writing, not later than noon on Tuesday, April 26, 2022, of the following: (i) whether they propose to adduce new evidence on the sole issue of appropriate orders; and (ii) their expected timing requirements and suggested dates. After the panel has received and considered the responses to this direction (or after the date specified for such responses has passed), the Registrar will inform the parties of the timing of next steps in this proceeding."
Jan Cerato ran a bitcoin meetup in late 2017 where an investment opportunity called the Whale Club was promoted. Funds were pooled together and invested by Jan with a team of 4 others in different cryptocurrencies. The full details are unclear, though investors almost all lost money. The ASC found that Jan's activities were unlawful though court proceeding is still underway to determine a resolution.
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