Decision in brief: Ontario Securities Commission v Liquid Marketplace Inc, Enforcement Proceeding, Merits, September 30, 2026

In this enforcement case, the OSC says that Liquid Marketplace Inc. and Liquid Marketplace Corp. (together, LMP) created and sold digital tokens that LMP said gave purchasers small ownership interests in collectibles, and that LMP operated an online platform where the tokens could be bought and sold.

The OSC alleges that the tokens met the definition of securities in Ontario, and LMP was required to register before trading them and file a prospectus (a document that provides information about an investment) before selling them. LMP was also required to get approval before operating the online platform, which met the definition of a marketplace.

The OSC alleges that LMP and its co-founders, Ryan Bahadori and Amin Nikdel, committed fraud by making false statements to purchasers about the tokens.

The OSC alleges that Bahadori, Nikdel and Dennis Domazet, LMP’s Chief Financial Officer, were responsible for LMP’s conduct and that they each made misleading statements to the OSC during its investigation.

The Tribunal decided that the tokens, together with the rights and conditions surrounding them, were an “investment contract”, a type of security. Purchasers depended on LMP to create and maintain the tokens, operate the platform, allow trading, keep ownership records, and arrange for the collectibles to be authenticated, valued, stored and insured.

The Tribunal decided that LMP was in the business of trading securities without being registered, sold securities without filing a prospectus, and operated a marketplace in Ontario without the required approval. As directors and officers, Bahadori and Nikdel were responsible because they authorized or allowed LMP's conduct. The OSC did not prove that Domazet knew about LMP's registration, prospectus or marketplace breaches of Ontario securities law.

The Tribunal decided that LMP, Bahadori and Nikdel committed fraud. LMP and Bahadori told purchasers that the tokens gave them legal ownership interests in collectibles and could be transferred on the Ethereum blockchain. In fact, most collectibles were not covered by listing agreements, ownership interests were recorded only on LMP’s internal system, and purchasers could not transfer the tokens to their own digital wallets. Statements that the collectibles were authenticated, fairly valued, securely stored and insured were also false. These statements put purchasers’ money at risk. Nikdel participated in the fraud. He knew the true facts and knew or should have known that the conduct was fraudulent.

The Tribunal decided that Domazet was not responsible for LMP's fraud because he raised concerns about the conduct instead of quietly accepting it.

Lastly, the Tribunal decided that Nikdel misled the OSC about the compensation that he, Bahadori, and Domazet received from LMP. The OSC did not prove that Bahadori or Domazet misled the OSC.

The Tribunal will hold a hearing to decide what sanctions and costs should be ordered against LMP, Bahadori and Nikdel.