The bankruptcy of Aiden Pleterski, the self-proclaimed ‘Crypto King’ began on August 9, 2022, with a court application brought by Baker McKenzie on behalf of a group of investors. This case garnered significant media attention due to the conduct of the Crypto King before and after his bankruptcy, as well as his kidnapping and assault by some of his investors. The saga continued in 2024 with a joint investigation by the Durham Regional Police Service and the Ontario Securities Commission leading to criminal charges for alleged money laundering and fraud.

The Ontario Superior Court of Justice refused to grant Pleterski his discharge from bankruptcy on July 17, 2024, after finding that “Mr. Pleterski has also consistently failed, again as documented by the Trustee, to comply with his statutory duties under the BIA, including failing to disclose his assets and/or material information to assist the Trustee in realizing on the Bankrupts’ assets.”

In a further development, in Pleterski (Re), the Ontario Court of Appeal affirmed a decision In the Matter of the Bankruptcy of Pleterski and AP Private Equity Ltd, granting relief from forfeiture of a $500,000 application by Pleterski’s bankruptcy trustee.

Prior to his bankruptcy, Pleterski and an associate had agreed to purchase a property from a holding company for $5.5 million and Pleterski had paid a $500,000 deposit. The closing never occurred and after learning of the deposit, the bankruptcy trustee notified both the real estate broker and the holding company of its claim to the deposit, resulting in the funds being placed in escrow.

The property eventually sold for $5.8 million, $300,000 more than the initial agreement with Pleterski. In exercising its discretion under section 98 of the Courts of Justice Act to grant relief from the forfeiture of the deposit, the lower court judge applied a two-part test: first, whether the forfeited amount is out of proportion to the damages suffered; and second, whether it would be unconscionable for the party to retain the benefit.

The Court of Appeal found that the relief granted was appropriate for several reasons. First, the majority of the deposit funds belonged to the creditors who had not authorized their use in this manner. Second, equity favoured the creditors. Third, the vendor had still realized a profit from the sale of the property to another buyer subsequent to Pleterski.

Takeaway

The Pleterski ‘Crypto King’ saga serves as a stark reminder to all investors that the promise of high profits should never obscure understanding the true nature of the investment, and with whom you are investing.

With thanks to Andie Hoang, Daniel Dai and Amy Bing for their assistance with this article.
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Photo of Michael Nowina Michael Nowina

Michael Nowina’s litigation practice focuses on a broad range of commercial disputes including advising on the recovery from fraudulent investment schemes, mortgage fraud and credit fraud. Michael’s fraud-related and investigations experience includes representing victims of a Canada-wide investment fraud and ultimately securing recovery…

Michael Nowina’s litigation practice focuses on a broad range of commercial disputes including advising on the recovery from fraudulent investment schemes, mortgage fraud and credit fraud. Michael’s fraud-related and investigations experience includes representing victims of a Canada-wide investment fraud and ultimately securing recovery of a majority of the proceeds from the fraud, advising numerous creditors in proceedings commenced to recover fraudulent conveyances and preferential payments in multi-jurisdictional litigation, and representing financial institutions in identity fraud cases and in proceedings to recover funds from fraudulent borrowers. Michael also frequently advises clients on insolvency matters involving fraud.

Photo of John Pirie John Pirie

John Pirie leads Baker McKenzie’s Canadian litigation and government enforcement group and is a member of the North American group’s Steering Committee. A Chambers ranked trial lawyer, he handles complex business disputes, investigations and white-collar matters, particularly those with multi-jurisdictional aspects. John’s focus…

John Pirie leads Baker McKenzie’s Canadian litigation and government enforcement group and is a member of the North American group’s Steering Committee. A Chambers ranked trial lawyer, he handles complex business disputes, investigations and white-collar matters, particularly those with multi-jurisdictional aspects. John’s focus includes a significant fraud and financial recovery component, having pursued and defended a range of leading cases in the area. He has deep experience with emergency relief measures, including global asset freeze orders and remedies available in bankruptcy and receivership. John has acted for governments, banks, investors, multinational corporations, officers and directors, a stock exchange, a securities regulator, members of the judiciary and an array of professionals. Clients interviewed by Chambers Global say: “John Pirie has an excellent command of the law and clients’ needs and expectations” and “he is an experienced courtroom advocate who is particularly well regarded for his civil fraud expertise.”

Photo of Ahmed Shafey Ahmed Shafey

Ahmed Shafey practices commercial litigation, providing advice in the context of fraud/misrepresentation claims, contractual disputes, professional liability actions, shareholder disputes, government procurement litigation, international commercial arbitrations and bankruptcy and insolvency proceedings. Ahmed has been engaged in a number of civil fraud and asset…

Ahmed Shafey practices commercial litigation, providing advice in the context of fraud/misrepresentation claims, contractual disputes, professional liability actions, shareholder disputes, government procurement litigation, international commercial arbitrations and bankruptcy and insolvency proceedings. Ahmed has been engaged in a number of civil fraud and asset recovery matters as well as complex business crime investigations, including in tracing preferential payments, investigating complex investment frauds and moving for emergency injunctive relief to preserve and protect assets in Canada and beyond.

Photo of Anton Rizor Anton Rizor

Anton Rizor is an Associate in Baker McKenzie’s Litigation & Government Enforcement Practice Group in Toronto. Anton joined the Firm as a summer student in 2021 and completed his articles in 2023. Anton is fluent in English and German. Anton is developing a…

Anton Rizor is an Associate in Baker McKenzie’s Litigation & Government Enforcement Practice Group in Toronto. Anton joined the Firm as a summer student in 2021 and completed his articles in 2023. Anton is fluent in English and German. Anton is developing a broad arbitration, class action and litigation practice, including in civil fraud and asset recovery matters.

Photo of Bryan Hsu Bryan Hsu

Bryan Hsu is an Associate in Baker McKenzie’s Litigation & Government Enforcement Practice Group in Toronto. He joined the firm as a summer student in 2021 and completed his articles in 2023. Bryan is developing a broad litigation and arbitration practice, with interest…

Bryan Hsu is an Associate in Baker McKenzie’s Litigation & Government Enforcement Practice Group in Toronto. He joined the firm as a summer student in 2021 and completed his articles in 2023. Bryan is developing a broad litigation and arbitration practice, with interest in civil fraud and asset recovery matters.