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In Autorité Des Marchés Financiers (AMF) v. Alexandre Gagnon1, the Quebec Financial Markets Administrative Tribunal (the Tribunal) adopted a narrow interpretation of "investment contract" when considering whether the activities of a crypto "finfluencer" constituted advising in securities and market manipulation. This landmark case adopts the reasoning of Securities Exchange Commission (SEC) vs. Ripple Labs, Inc., Bradley Garlinghouse and Christian A. Larsen2, the first U.S. case to consider whether crypto assets traded in secondary markets could be classified as securities.
The AMF has appealed the decision to the Court of Quebec.
Background
In 2023, the AMF commenced an enforcement investigation of Alexandre Gagnon and his company, "Richie the Bull" (respondents). Richie the Bull offered two types of services: (1) management of crypto asset investments on behalf of clients on the Uniswap decentralized exchange (DEX); and (2) paid subscriptions to private social media groups on Patreon and Telegram to receive buy and sell signals on crypto assets that would subsequently be promoted on Twitter.
The AMF alleged that both of Richie the Bull's services constituted investment contracts and, therefore, the respondents were distributing securities without a prospectus and advising in securities without registration, in contravention of the Securities Act (Quebec) (QSA). The AMF also alleged that the respondents engaged in market manipulation.
The AMF sought orders for the respondents to be prohibited from: (1) carrying on any activities to effect a transaction in an investment contract, and (2) acting as advisers or investment fund managers within the meaning of the QSA. The AMF also sought to freeze all of the assets of the respondents.
Definition of "Investment Contract" in QSA
The Tribunal's interpretation of "investment contract" in the QSA is highly relevant across Canada when determining the extent to which securities legislation applies to crypto asset activities.
The QSA is the only Securities Act in Canada that defines "investment contract":
a contract whereby a person, having been led to expect profits, undertakes to participate in the risk of a venture by a contribution of capital or loan, without having the required knowledge to carry on the venture or without obtaining the right to participate directly in decisions concerning the carrying on of the venture.
The QSA definition closely adheres to principles from the Supreme Court's decision in Pacific Coast,3 which is invoked by all other Canadian securities regulators when interpreting the "investment contract" category of security under their Securities Acts. The QSA definition draws from leading U.S. Supreme Court decisions referenced in Pacific Coast (such as Howey).4
Crypto Investment Management Services are Investment Contracts
The Tribunal accepted the AMF's allegation that the respondents' investment management services on the Uniswap DEX constituted investment contracts under the QSA. It reasoned that investment contracts arose when the respondents took control of investors' ETH, traded it on Uniswap, and kept a 20% share of the trading profits. These transactions were in the nature of investment management, because investors assumed the risks and had no rights to participate in the respondents' investment decisions.
"Finfluencer" Services unlikely to be Investment Contracts
The Tribunal rejected the AMF's allegations that the respondents' paid social media groups constituted investment contracts, noting that:
- subscribers have "rights to participate directly in decisions concerning the conduct of the business...as they clearly have the choice of whether or not to follow the recommendations to buy or sell crypto assets published by the respondents within these private groups".
- the AMF did not demonstrate that the subscribers lacked necessary knowledge required to conduct the business.
- to the contrary, the "relatively high membership fees charged by...Richie the Bull...and their objectives are...are much more likely to attract investors with a high level of sophistication and knowledge of the world of crypto assets and equities – where 'pump and dump' schemes have been prevalent for over a century..."
The Tribunal reasoned that if subscription fees to financial publications were always considered investment contracts, then the contemporary world would be deprived of an important source of information. Because the subscription services were not investment contracts, they were also not securities under the QSA.
Crypto "Pump and Dump" Schemes on DEXs unlikely to be Trades in Securities
The Tribunal rejected the AMF's allegation that the respondents' "pump and dump" schemes constituted market manipulation under the QSA, because the relevant crypto assets in the schemes were not securities.
The AMF argued that, based on its detailed analysis of six of the 30 crypto assets that has been promoted by the respondents (BLANK, YDF, OXO, G9, BLC and ALTN), "at first glance, for each of these tokens, the components of an investment contract appear to be present from the moment they are distributed to the market".
The Tribunal observed that the QSA had not been amended to include "crypto asset" in the definition of security. Consequently, the Tribunal could not conclude that the respondents violated the QSA "based solely on the [AMF's] evidence that the respondents manipulated...the price or value of approximately 30 cryptoasset tokens. The [AMF] must also demonstrate...that these cryptoasset tokens constitute a form of investment subject to the Act".
In rejecting the AMF's position, the Tribunal applied a similar test for investment contract to the Southern District of New York in Ripple:5
... [Ripple] makes a clear distinction - with regard to the existence of investment contracts - between the situation where individuals make a contribution to the promoters of a cryptoasset for the purpose of financing the development of an underlying venture and the situation where individuals simply purchase cryptoassets from other individuals who already own them and who are not promoters, all through decentralized online exchange platforms in what that court describes as impersonal "programmatic sales" carried out using the transaction algorithms used by these platforms.
In the first case, an investment contract may exist, because the investors' contribution is paid to the promoter of a cryptoasset for the purpose of financing an underlying business related to that cryptoasset. In the second case, this is not possible, because, clearly, the contribution is not paid to the promoter, but to other holders of that cryptoasset who simply wish to dispose of it, in particular to make a speculative profit, all in an impersonal manner through the algorithms used by decentralized trading platforms accessible via the Internet.6
The Tribunal was not satisfied based on the evidence that the crypto assets at issue were securities. The Tribunal recognized that investment contracts likely arose between the creators of BLANK, YDF, OXO, G9, BLC and ALTN, their promoters and those who initially purchased the tokens "with the aim of participating in the financing of the underlying venture". However, subsequent trading by Richie the Bull and its subscribers on DEXs occurred with "persons who already held those tokens but were not the promoters" and for purely speculative purposes.
The Tribunal observed that "the nature of a crypto asset may therefore vary depending on the economic reality surrounding a transaction involving that crypto asset".7
Asset Freezing Order Not Granted, since No Urgency or Evidence of Harm
The Tribunal denied the AMF's motion to freeze all of the assets of the respondents, finding that the AMF had not proven that:
- investors experienced any losses from the respondents' conduct.
- the respondents were in possession of investor funds.
- the respondents were currently engaged in any illegal activities.
- there was any urgency, since the order was being sought after the investigation has been ongoing for over two years.
- the AMF would ultimately bring an action against the respondents.
The Tribunal found that, to freeze the respondents' assets in such circumstances would have violated fundamental principles of justice set out in the Canadian Charter of Rights and Freedoms, and would have the potential to "plunge citizens, the financial market, our democratic society and legal system... into a 'Kafkaesque universe'". The order, if granted, would have had the effect of "instantly plunging [the respondents] into complete destitution and...a very severe de facto impact on their financial ability to retain the services of a lawyer to defend them in the further proceedings".
The AMF is appealing the Tribunal's decision. Meanwhile, the AMF has not brought any public enforcement proceeding against Richie the Bull.
Takeaways
Gagnon is a strong signal to Canadian securities regulators (collectively, the CSA) that, unless and until the legislatures expressly grant the CSA broad jurisdiction over crypto assets as an asset class, or the definition of "security" is amended to include "crypto assets", the CSA's authority over crypto asset market participants should be confined to activities that engage existing securities laws.
Moreover, Gagnon might cause the CSA to reflect on the Tribunal's refrain that in the "context of rapid evolution of a significant sector of the financial market...it must exercise caution in its decisions relating to cryptoassets, in particular to avoid unexpectedly blocking the evolution of the financial and commercial sector having an increasing interaction with cryptoassets".8
This refrain is particularly important for trading in crypto assets conducted on DEXs or other non-custodial, decentralized protocols. Even though the impugned conduct might be objectionable, such as the alleged "pump and dump" schemes in Gagnon, the CSA's jurisdiction over the activity should be a threshold consideration.
The CSA's assertion of jurisdiction over the activities of custodial crypto asset trading platforms (CTPs) has made the CSA the de facto regulator for much of the crypto industry. CSA oversight has benefited CTPs and their users by imposing a regulatory framework built on foundational principles of investor protection and market integrity.
However, following the rollout of its dealer registration regime for CTPs in 2021, the CSA has progressively broadened its view of when crypto assets are securities, purporting to include stablecoins in 20239 and crypto-backed loans in 202510. Yet the primary use case for stablecoins (payments) and crypto-backed loans (borrowing) is not investment, and therefore securities regulatory jurisdiction over these activities is questionable. The CSA's policy positions are not law and have not been affirmed by legislative amendment or caselaw following a contest on the merits.
Footnotes
1. [Decision No. 2024-033-002 August 22, 2025] (Gagnon). Our discussion of Gagnon is based on an uncertified translation of the French decision provided by Spiegel Ryan, counsel to the respondents, and is available upon request by contacting Martin Bédard at mbedard@spiegelryan.com. We encourage you to read Spiegel Ryan's article Cryptoassets and Securities Law: A Game Changer in Quebec (September 10, 2025).
2. 20 Civ. 10832 (AT), Case 1:20-cv-10832-AT-SN Document 874 Filed July 13, 2023 (Ripple). See our prior blog What Ripple Means for Canadian Crypto Regulation for a further discussion.
3. Pacific Coast Coin Exchange v. Ontario Securities Commission, 1977 CanLlll 37 (SCC), (1978) 2 SCR 112 (Pacific Coast).
4. SEC v. W. J. Howey Co. 328 U.S. 293 (1946) (Howey) and State of Hawaii v. Hawaii Marker Center, Inc., 485 P. 2d 105 (1971).
5. Securities and Exchange Commission v. Ripple Labs Inc., Bradley Garlinghouse and Christian A. Larsen, 2023 US Dist. LEXIS 120486 (SDNY July 13, 2023) (Ripple).
6. Gagnon at paras. 91-93.
7. Gagnon at para. 93.
8. Gagnon at para. 94.
9. CSA Staff Notice 21-332 Crypto Asset Trading Platforms: Pre-Registration Undertakings Changes to Enhance Canadian Investor Protection (February 22, 2023); and CSA Staff Notice 21-333 Crypto Asset Trading Platforms: Terms and Conditions for Trading Value-Referenced Crypto Assets with Clients (October 5, 2023).
10. CSA reminds crypto-backed lending platforms of potential regulatory requirements, and cautions investors over risks (October 22, 2025).
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