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Number 1,020, May 12, 2019

What? Me Worry?

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Ontario Descends to Fishing for an Attack Surface vs. Ascension
by the team

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Special to L. Neil Smith’s The Libertarian Enterprise


This article is addressed to our CryptoWealth account holders and email list subscribers, and all those who may be interested in our project and products.  We anticipate that it will become part of an ongoing series of public blog posts about the Ascension/Lyra project and the cryptocurrency industry in general.

Today we will be considering: 1) an alarming recent development; 2) some reflections on this development; and 3) what we can all do about it.

What's Up

It has come to our attention that several people in our group who live in the GTA (Greater Toronto Area as natives call it) have recently received phone calls from a man named Craig Gallagher (not sure about spelling), who claims to work for the OSC.  (The Ontario Securities Commission is essentially the counterpart of the Securities Exchange Commission (SEC) in the USA, only for the province of Ontario.)   This fellow is asking questions about purchases and holdings of Lyra, seeking copies of marketing materials, etc.  In plain English this is known as a fishing expedition, trolling for disgruntled buyers hoping to locate at least a few who might be willing to make a signed complaint, in order to supply a legal pretext for making trouble for everyone.  (If anyone holding Lyra is in fact disgruntled or concerned about something, we hope that they'd let us know, like the people who got these calls did.)  In other words, standard operating procedure for authorities tasked with tackling the threat posed by the cryptocurrency industry to the dominance of established interests and firms—more on this point later.

Our view is that anyone who contacts you asking impertinent questions about your private business deserves to be told to mind their own.  “Am I obliged to answer your questions?  No?  Then forget it.”  End of conversation.  If you've purchased Lyra you've done nothing wrong.   After all it's crypto, not cocaine.  It's legal.  But as any competent defense lawyer will tell you, there is absolutely nothing to be gained, ever, by “talking to the police.”  And that goes double when you're wholly innocent.

Unfortunately we all live in an increasingly totalitarian world.  Anyone much over 30 has probably witnessed a good deal of the deterioration, if they've been paying attention.  (In a way that's kind of the whole point of crytpocurrency, to move the needle back the other way a bit; but again, more on that later.)  Ontario is sadly no exception.

What Could Go Down

The OSC regulations provide that the commission can serve a summons to any Ontario resident to appear and answer questions, possibly (therefore probably) under oath.  Moreover the recipient of such a summons is bound by an automatic gag order not to tell anyone about their summons.   The complete OSC regs can be found here:

Sections 11-18 are relevant to investigations and summonses.  If anyone has received a summons, they are effectively prohibited from notifying us, as we shall see (but mere phone calls are quite a different matter).  So we don't expect to see any copies.  However, the rules do stipulate what must be included.  Section 13(1) reads:

A person making an investigation or examination under section 11 or 12 has the same power to summon and enforce the attendance of any person and to compel him or her to testify on oath or otherwise, and to summon and compel any person or company to produce documents and other things, as is vested in the Superior Court of Justice for the trial of civil actions, and the refusal of a person to attend or to answer questions or of a person or company to produce such documents or other things as are in his, her or its custody or possession makes the person or company liable to be committed for contempt by the Superior Court of Justice as if in breach of an order of that court.

The gag order part is contained in Section 16(1) which reads:

      Except in accordance with section 17, no person or company shall disclose at any time, except to his, her or its counsel,
      (a) the nature or content of an order under section 11 or 12; or
      (b) the name of any person examined or sought to be examined under section 13, any testimony given under section 13, any information obtained under section 13, the nature or content of any questions asked under section 13, the nature or content of any demands for the production of any document or other thing under section 13, or the fact that any document or other thing was produced under section 13.

So let's sum up: the laws of Ontario give these unelected government bureaucrats the ability to require anyone to testify under oath, even against themselves, and never to tell anyone (other than their attorney if they have one) what they were asked, what they answered, or even the fact that they were ever questioned at all.  They might be wiser to make up a lie for their spouse, their boss at work, or anyone else to explain where they were that day.  Stop and let that sink in for a moment.

What Could Be Done

If the OSC goes this route, and starts handing out summonses, rest assured the boilerplate language deployed will make a big deal out of the point above about being “liable to be committed for contempt by the Superior Court of Justice.”   So it makes sense to take a look at the rules concerning contempt proceedings in civil actions.  (Contempt in the case of criminal cases is a separate topic, and as we saw above the OSC has summons authority “as is vested in the Superior Court of Justice for the trial of civil actions”.)   The Rules of Civil Procedure re contempt can be found here, in section 60.11:

Looking at this section, things suddenly appear a lot brighter and less scary.  The most relevant bits are these:

      (1) A contempt order to enforce an order requiring a person to do an act, other than the payment of money, or to abstain from doing an act, may be obtained only on motion to a judge in the proceeding in which the order to be enforced was made.  R.R.O. 1990, Reg. 194, r. 60.11 (1).
      (2) The notice of motion shall be served personally on the person against whom a contempt order is sought, and not by an alternative to personal service, unless the court orders otherwise. R.R.O. 1990, Reg. 194, r. 60.11 (2).
      (3) An affidavit in support of a motion for a contempt order may contain statements of the deponent’s information and belief only with respect to facts that are not contentious, and the source of the information and the fact of the belief shall be specified in the affidavit.

So it turns out that “being liable to be committed for contempt” simply means that the OSC has the right (but not the obligation) to go before an actual judge and explain, by means of a signed affidavit (executed by the OSC agent under penalty of perjury, as with all affidavits), why the court should order the party summoned to comply with the summons, and/or punish them in some way for their non-compliance.

The judge has broad discretion in dealing with such a motion.  He or she may dismiss it, perhaps on grounds that the summons was abusive or unjustified, or constituted an overreach of the OSC's authority.  The judge can also uphold the summons, modify or limit it, even rewrite it completely.  And yes, the judge can impose a fine or even a jail sentence (a few days is typical) for the failure of the witness to comply.  But precisely because of these latter circumstances, the highest level of legal standards (as in a criminal case) must be upheld.  For example, you cannot be compelled to be a prosecution witness, you are innocent until proven guilty, and contempt must be proved beyond reasonable doubt.  And contempt can usually be purged before any punishment is imposed, simply by complying with the judge's order.

In other words the most likely results of failing to obey a summons from the OSC are these:

  1. Instead of just typing up whatever he wants on his computer, now the OSC agent has to go before the court and legally justify in an affidavit why he wants to question you, and state the reasons why it's so imperative that you be compelled to answer his list of questions.  And if that affidavit is looking tough to write in a way that won't make him look like a complete fool, the agent may well decide not to file a contempt motion at all.
          There's also the very real issue of how many trips to the well the agency can expect to make, before the court begins to resent all the docket space being taken up by contempt motions.  The only way the court could stem that flow and express its displeasure would be to start rejecting the agency's motions pretty much on sight.  Which is exactly what it should do, and possibly would do, were it to become aware that agencies like the OSC were papering the town with summonses as a matter of routine.
  2. But if a motion is filed, you get served notice and have the right to attend the motion hearing.  (In fact the judge can issue a bench warrant to compel you to attend if they think it's important for you to be there and that you wouldn't appear voluntarily.)
  3. You get the chance to explain to the judge why you didn't respond as ordered, and why you don't think you should have to.  (Gee, how about: Your Honor, where in the law does it say that the OSC is responsible for regulating the cryptocurrency industry in the first place?  I searched online and I couldn't find such a law.  So I think this summons might be bogus.)
  4. If the judge rules in your favor, you have effectively “quashed” the summons.
  5. If the judge rules against you, then you had better comply with whatever the court's order says (not the OSC's original summons, should they be different).  This amounts to being back to square one, give or take any changes to the order.

We don't know about you, but to us this series of events sounds much more favorable than just meekly going into the lion's den to testify under oath and be asked who knows what, by people who are likely hoping to catch you out in some misstatement or omission.  Which they can then use to threaten you with perjury charges so they can “squeeze you” or “flip you,” and perhaps get you to testify (maybe even to lie) about someone else in order to save yourself from what's known as a “process crime.”  Because sadly, that's how these kinds of fishing expeditions often work.  (In the USA this style of investigation was just run for two years by a certain Mr. Mueller.)  Agents are looking for their “scratch” to further their careers, and typically don't much care who gets railroaded to make it happen.  And it's the ignorance of all the frightened folks who would never actually look anything up that makes the whole thing work, and lets the agencies get away with it all.

That said, only an attorney whom you have personally retained can offer you legal advice.  We are not offering you any legal advice here, should you ever find yourself in this kind of difficult situation.  We're just having a look at what the rules of play actually say, and making a few observations.

What's Important

Agencies like the OSC and their big brother the SEC like to posture that their mandate is to protect the public.  (And surely whatever abuses they might themselves commit must be worth it if the public is being protected, right?)  Presumably loss due to fraud would be a big part of the definition of “from what” they're protecting the public.  So since they seem to want to regulate crypto so much, let's have a look at their performance on that score in the crypto space thus far, shall we?

One of the benefits of being in the digital payments / crypto space as long as we have is that the scams are pretty easy to spot, because we've learned to recognize the signs.  So let's go over a few:

  • USI-Tech: an obvious ponzi scheme.  Claimed to have different robot “trading programs” which generated absurd returns from cryptocurrency trading that would have made Wall Street brokerages' high-frequency order front-running operators blush with envy.  (No way to do this in bitcoin, folks.)  Naturally, they crashed as all ponzis eventually do.  Where was the OSC? Late to the party.  Just last February 2019, long after USI-Tech had gone poof, and a year after their colleagues in Quebec did the heavy lifting to issue their order in March 2018, the OSC finally offered this bit of bandwaggoning in the form of a final permanent cease-and-desist order:   The only work the OSC appears to have done itself on top of Quebec's, in furthering the protection of Ontario residents, was to speak to two (2!) local investors in USI-Tech.  When clearly just from social media tens of $millions went into this scam.
  • BitConnect: another painfully obvious ponzi that promised enormous returns from an alleged micro-lending scheme using bitcoin.  If bitcoin comes in and bitcoin goes out, and the bitcoin coming out is like 2x or 3x what went in, over a short period of time, it's a ponzi.  Goodbye, the end.  NO exceptions.  You can't print bitcoin, and only a tiny supply of coins are mined globally each day.  Where was the OSC?  About two years late. BitConnect launched in Feb. 2016, and here is the OSC in April 2018:  How very grateful everyone must have been for this warning so late in the day!
  • Onecoin: a confidence game from start to finish.  Never had any actual technology, only a killer sales plan.  Brought in on the order of an incredible 3-5 billion (with a 'B') euros for sheer vaporware.  Strangely, management was too stupid (or too greedy) even to spend some of that vast sum of money to develop something real that might have kept them out of jail.  (Sidebar: we know some of you put money into Onecoin, and we're very sorry to hear that.  Pity you didn't ask us about it first.  We didn't waste more than about ten minutes on it before deducing it was a con game.)  But nobody who got taken needs to feel bad, because where was the OSC?  Nowhere!  A search of Onecoin + OSC comes up with nada, on both the OSC's site and Google.  Good job boys and girls, after billions got stolen worldwide!
  • Gladiacoin: another obvious, faceless ponzi with a slick website and no one visible behind it. This one lasted only a few months before the operators vamoosed with a stash of BTC.  Again, the OSC was johnny-on-the-pot, must have been on a long restroom break or a three martini lunch while this one was going down.  Was big in Toronto while it lasted, though.
  • and (Note the '1' on the end.)  This was apparently a mining scam, one of those deals where you supposedly buy a bunch of leased hashing power and earn a ROI from mining bitcoin or some other cryptocurrency.  Real crypto mining is very capital-intensive and extremely competitive.  Like any case where overkill is combined with competition, returns are very meager, and plenty of miners went out of business during the “crypto winter” of 2018 because their costs exceeded their earnings.   Making 50 - 100% per month, as these kinds of ventures typically promise, is utterly impossible.  Bitcoin is the 800 lb. gorilla here with the largest hash rate, but only a mere 1800 BTC or fewer are mined each day, and those are divided up among many miners who each have millions of dollars worth of equipment installed.  So the total value mined daily is only on the order of $10M USD, and you'd need a prodigious amount of machines deployed to garner even 1% of that total.  Mining scams are like the state-run lotteries: essentially a tax on people who are bad at math.
          We weren't very happy when these guys started operating using a domain name so close to ours.  (We expect famed business coach JT Foxx was even less happy that his good name was appropriated for a faked endorsement on   Their main site has now been down for months, and we've gotten a fair number of anguished appeals from their victims sent to our support email address at  However we have nothing to do with these scammers, and thus can do nothing to help those folks.  (If you're wondering whether this explains the OSC's interest in us, we did too at first; but from what we were told the agent was definitely asking questions about Lyra, not mining pools.)  Anyway they're gone and good riddance.
  • There are a large number of other ponzis currently operating around the world.  Lately some prominent ones have been based out of Asia.  If you spend maybe half an hour scanning crypto-related social media, you'll discover that they're openly holding pitch meetings in the backs of restaurants all over the GTA.  It's not our job to name and shame the ones we suspect of being scams, nor would we want to accuse anyone unjustly.  But we can certainly help people learn to recognize these things for what they are when they first see them.  Here's a big clue: if you're investing “hard crypto” (like BTC, LTC, ETH) and you're promised a big return (say 50% or more), also paid in hard crypto, and you can get it out really quickly (like in 30-90 days), it's a scam.  Guaranteed.   If you're into something like this, get your money out asap.  And if you're promoting it, think about how much credibility you'll forfeit once it goes kaboom.  It will.
          The only way such dynamics could possibly be real and sustainable is if they're paying you rewards in their very own native “soft” crypto token, with no guarantees as to buy-backs or future price.  The long-term success of any project depends upon how well it scales into actual  economic activity involving real use-cases and customers.  This means it's a long-term play for which you yourself can take some responsibility, and engage in actions to help bring about success, instead of just passively relying on the efforts of others like a speculator.  (Note: this paragraph describes the Ascension/Lyra model!)
          Anyway, where is the OSC?  Nowhere to be seen.  Anyone not blind can see what's happening with these probable ponzis on social media, practically in real time.  Is there even an investigation underway?  If there is, we expect it will release its findings after these programs have already died.
  • In reality, crypto enthusiasts in the private sector are doing a far more competent job of protecting the public than any government agency.  Here's a sample site highlighting likely scams with corroborating research:
          We searched 50 randomly chosen from the list on the OSC site and got zero results!  These are not insignificant scams and they're playing out in real time.  For example, Cardonio has 600K visitors per month.  Hard to believe that a significant portion of these aren't from Ontario's vibrant crypto community.  Cardonio is an obvious scam with fake social media profiles that has been busted long ago by the community, but yet somehow doesn't find its way onto the OSC's radar.

So scammers have demonstrably run, and arguably continue to run rampant in Ontario, while the OSC is absent, not paying attention, or in a few high-profile cases posts very tardy warnings to make itself look good (or less bad), mainly based on regurgitating the research efforts of others.  And yet, one place we now know they actually are deploying at least a little bit of their resources is: Ascension!  The force of irony is strong with this agency.

What It Means

Well golly gee, we're downright honored.  No, we mean it.  Because focusing on a small, legitimate project with real technology, real people behind it, a history spanning nearly a decade, and real prospects for long-term success, while letting the crazy speculative orgy of enormous ponzi scams go along apparently unmolested, does show us a couple of interesting things.  First of all, it shows us who they're really afraid of.  Us!  Not Onecoin, not USI-Tech, but us, Ascension and CryptoWealth.

Why is this?  Hard to know for sure, but our mission statement itself might provide a clue.  From our white paper, that mission is: “To promote the growth of robust, borderless, wealth generating, free market ecosystems.”  This means an alternative economy not run by bureaucrats for the benefit of the financial firms, big banks and brokerages, establishment corporate infrastructure, and their donor class owners.  And, one robust enough (for example, with sufficient privacy) to frustrate attempts by the oligarchs to take control of it.

Such a free economy would be anathema to the people that the OSC actually work for.  It's also the fulfillment of the original vision of the cryptocurrency movement.  And it hasn't died, despite all the scamsters and the bureaucrats over the years, the exploiters and the interferers.  We're here to help complete that vision.  We say so openly.  And that of course is why we're dangerous.

The other thing the OSC's actions show us, far louder than their words, is that like all such agencies in every country, their claims to be working for the public interest are a total sham.  Their true job is to protect their real bosses' turf and profits, while making sure that only people who are already rich get to invest in anything good, and that anything new which can't be co-opted into the fold gets nipped in the bud, if possible.   Establishment attitudes toward crypto remind us of how the US Postal Service once lobbied Congress to require that all emails be delivered only through the Post Office.  Hence the hostility toward bitcoin until Wall Street started trading in it.  And hence the blitz against ICOs once they started cutting into the market for stock market IPOs.  The problem wasn't the ICOs that were frauds, it was the ones that weren't frauds.  Ask anyone who bought the recent IPO of Lyft, or the IPOs of Blue Apron or Snapchat before that, how well retail investors are protected via the IPO process.  The investing public are the bagholders by design.  The fact is, today there's no greater good where government is concerned.  There is only greater greed for money and power.

Lest anyone think that we're picking on the OSC pretty hard here (okay, we are) we also enjoy picking on their American counterparts.  Here's a rip-roaring article one of our associates from SilentVault wrote about the SEC a while ago:

And here's one about the tax agency in Australia getting its arms around tracking the crypto holdings of Aussies.  If you can't prohibit it effectively, make it legal and tax it.  Hey, it worked with weed!

What to Do

Hopefully, you find all this as motivating as we do.  Sure, it sucks to have securities agents phoning your customers.  It would suck even more if they start sending them summonses.  But it's also flattering and gratifying in the sense that we're clearly getting somewhere.  Anything legit that's worth an attack, no matter how small, by the corrupt establishment, must be worth finding out more about!

And there are lots of people who know it.  Rest assured, this is a potentially huge marketing opportunity for us.  We mean to give the OSC a refresher course on the meaning of the Streisand Effect.  We know some investigative journalists who cover the crypto space that might be very interested in covering what's going on here.

So what can you do to help?  You can help spread this article far and wide.  Send it to your friends.  Tweet out links to it (we'll be posting a copy of it on our website here:   If you don't yet own any Lyra, buy some.  We take most major cryptos, some stablecoins, USD, and CAD.  (Though it's conceivable we might need to stop accepting CAD in the future!)  One caveat: because we don't sell to the general public, you do need to be referred by an existing account holder authorized to make introductions.  (Try talking to the person who sent you this article.)   And by the way, so much for any contention that we're selling unregistered securities to the public.  We don't sell anything at all “to the public,” let alone securities.

If you have some Lyra already, please consider buying more.  If Lyra isn't your thing, feel free to buy some of our own existing stablecoins backed by bitcoin, litecoin, gold, silver, USD, or CAD.  All of these can coexist in our wallets.  They can be spent between wallets without leaving visible traces on any blockchain, and can even be swapped anonymously p2p for other assets with other users, right inside our wallet app.  You can even buy a license from Ascension to run your own digital currency issuer on our platform, or to operate an exchange, or an in-wallet store.  This isn't futureware, you can do all this today!

This fits in nicely with the SEC's recent guidance for determining when a crypto token might be a security.  The first and most important criteria are that the token's network is already deployed, and the token has some kind of a use case.  Our network has been running continuously since 2010, and OTO/Lyra vouchers made their debut in late 2016.  This guidance references the 1946 Howey case.  We took that test too in 2017 using a worksheet prepared by a US law firm, and we passed!  So are we worried that it will someday be proved that we're selling unregistered securities in Ontario?  Nah, not really.  In fact the very idea seems almost silly.

So in short, don't get scared by all this.  But feel free to get mad.  And then get busy!

The Ascension Team, via CryptoWealth Support








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