The Ontario Superior Court has sentenced a cryptocurrency company director to six months in custody after finding that investors likely would not have invested in a crypto token if they had known that the company had no ownership interest in a mine.
Ontario Securities Commission v. Katmarian, 2026 ONSC 2761, centred on the sentencing of S. Katmarian, a mining promoter and a Mississauga resident. He had a company called Northern Fox Resources Inc.
In 2016, Katmarian approached the president and chief executive officer of Cadillac Ventures Inc. – owner of Thierry Mine, a Northern Ontario copper mine that has been inactive since 1981 – with an idea to redevelop the mine.
Northern Fox and Cadillac signed an earn-in agreement that July. However, Katmarian could not raise the funds, and an initial public offering was not feasible.
Katmarian tried to raise funds with cryptocurrency. He became executive director, managing director, and board chair of Peblik Inc., which was developing token technology. Investors in Peblik tokens bought an asset-backed cryptocurrency, with the asset being Thierry Mine.
Katmarian faced charges for four counts of breaches of Ontario securities law.
The Ontario Securities Commission (OSC) said Peblik, which had no valid interest in Thierry Mine, sold investors notes convertible into tokens that never actually launched and promoted the notes based on a false claim that the mine backed the tokens.
According to the OSC, Katmarian was aware of and responsible for the misrepresentation in certain Peblik materials, which he knew could put investors’ financial interests at risk.
In March 2024, Judge Beverly Brown of the Ontario Court of Justice acquitted Katmarian on all four counts. The trial judge found that:
- 32 investors invested $448,515.50 in notes convertible to Peblik tokens
- The misrepresentations put the investors at risk of deprivation
- Peblik did not have a written agreement with Cadillac’s consent
- The assignment agreement between Northern Fox and Peblik did not give Peblik a valid ownership interest in Thierry Mine
The OSC appealed three acquittals.
Acquittal substituted with conviction
On July 29, 2025, Judge Robert F. Goldstein of the Ontario Superior Court of Justice dismissed the OSC’s appeal on two counts but allowed its appeal on the other count.
Thus, Goldstein convicted Katmarian of contravening Ontario securities law through securities-related conduct that he knew or should have known defrauded Ontario investors under s. 126.1 of Ontario’s Securities Act, 1990, thus committing an offence under s. 122(1)(c) of the Securities Act.
Goldstein ruled that the trial judge committed a legal error by acquitting Katmarian of that count after making factual findings sufficient for a fraud conviction.
Sentencing
Last May 11, Goldstein sentenced Katmarian to six months in custody, then 18 months on probation. Given the nature and context of the fraud, Goldstein imposed the jail sentence to promote general deterrence. Goldstein explained that a six-month sentence would:
- Consider the quantum of the offence
- Fulfill the sentencing principles applicable to a regulatory prosecution
- Acknowledge the fraud, which involved deceit, falsehood, or other fraudulent means
- Recognize that fraud in the securities industry might disrupt the market and erode trust and confidence
Goldstein held that a six-month sentence would not over-reach or disproportionately punish Katmarian.
“This decision is a strong reminder that making false claims about the financial backing of assets is fraud,” said Bonnie Lysyk, the OSC’s executive vice president for enforcement, in a news release. “It harms investors, damages confidence in Ontario’s capital markets, and has serious consequences.”
The OSC noted that Katmarian was appealing his conviction before the Ontario Court of Appeal.