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Summary

A recent decision by the Financial Markets Administrative Tribunal ("FMAT" or "Tribunal") re-examines the legal classification of cryptoassets in Securities Law[1] .

In this case, the Autorité des Marchés Financiers ("AMF"), the Quebec Securities Regulator, sought prohibition orders and blocking orders against the respondents. The respondents acted primarily as financial influencers on social media in connection with cryptocurrencies. Essentially, the AMF alleged that these "Finfluencers" had violated the Quebec Securities Act ("SA") by implementing a manipulation scheme known as "pump and dump" of cryptoassets.

The Tribunal granted only two of the prohibitions requested by the AMF in connection with unregistered brokerage activities. More significantly, however, the Tribunal reassessed the law applicable to conservatory measures and cryptoassets, particularly with regard to their classification as investment contracts subject to securities legislation:

• Cryptoassets and investment contracts: An investor who trades cryptoassets does not enter into an investment contract, and their "manipulation" cannot constitute a violation of the SA because these assets are not “securities”.
• Social media: Offering the public subscriptions to social media groups where cryptoassets are discussed and buy/sell signals are given does not constitute an investment contract.
• Burden of proof: outside certain exceptions, the burden of proof applicable in connection with applications for Conservatory Measures requires conclusive and preponderant evidence, not prima facie

These conclusions therefore rendered the provisions and violations under the SA inapplicable. In other words, if there is no investment contract, there is no security and the Securities Act does not apply.

These three conclusions constitute a major re-examination and change in the treatment of cryptoassets in Securities Law. In particular, the Court chose to follow the path laid out by recent U.S. case law in Ripple[2] . This decision distinguishes between the sale of cryptoassets by promoters, which may qualify as an investment contract, and sales made by investors on decentralized exchange platforms, which do not qualify as investment contracts.

[1] Autorité des Marchés Financiers v. Gagnon et al., 2024-033-002, August 22, 2025.

[2] Securities and Exchange Commission v. Ripple Labs Inc., Bradlye Garlinghouse and Christian A. Larsen, 2023 US Dist. LEXIS 120486 (SDNY July 13, 2023 (United States District Court – Southern District of New York).

Written by: Martin Bédard, Barry Landy, Francis P. Donovan.

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