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.