Ontario's Crypto King lied about income, has 'no remorse,' trustee's lawyer tells bankruptcy hearing | CBC News (2024)

A lawyer for the trustee in Ontario's self-described Crypto King's bankruptcy proceeding told a Toronto court Wednesday morning that Aiden Pleterskihas no remorse for his actions operating a Ponzi scheme and is continuing to cause his investors financial hardship byfailing to co-operate with his bankruptcy proceeding.

New court records filed by the trustee ahead of the bankruptcy discharge hearing allegedPleterski continues to hide income connected to online gaming and other internet services— and has failed to provide any evidence of where millions of dollars worth of cryptocurrency ended up.

"Mr. Pleterski should be embarrassed and ashamed of his conduct, but he clearly is not, and this is precisely the reason he should not be granted a discharge," saidLeanne Williams, counsel for the trustee, accounting firm Grant Thornton.

"He has lied about his assets; he has lied about his income."

Bankruptcy proceedings are administered by a licensed trustee, who is responsible for investigating the finances of a person or business that has gone bankrupt and for administering their estate.

The trustee claims the 25-year-old sold$430,000 worth of virtual weapons for online games and started managing OnlyFans creators for a 40 per cent cut of their profits while bankrupt.

None of those newly discovered fundswere disclosed to creditors, which willlikely factor into whether Ontario Superior Court Justice William Black releasesthe 25-year-old from bankruptcy.

Justice Black reserved his decision in Toronto court Wednesday morning.

Discharge should be conditional on repayment of millions owed: trustee

The trustee wants Pleterskito be denieda discharge.ButWilliamsalso argued that any discharge should be conditional on Pleterski payingback more than $4.5 million in assets and funds it says he hasn't accounted for and payingback 30 per cent, roughly $9 million, of the money the bankruptcy proceedings foundmore than 150 creditors lost with him.

Pleterski did not attend the hearing Wednesday, but in a recent affidavit, he said those conditions would ensure he was punished for the rest of his life "for mostly immature actions ... that had no ill intent."

"Essentially, they want me to remain an undischarged bankrupt for the rest of my life," he saidin the affidavit.

CBC Toronto has reported extensively on Pleterski since the summer of 2022, whenhe was forced into bankruptcy by some of his investors. For nearly two years, his investors have been trying to track down up to $40 million they gave him to invest in cryptocurrencies and foreign exchanges —although only about $27 million in proven claims were admitted to the bankruptcy proceedings.

In May, Pleterski was charged with fraud and money laundering following an 18-month joint investigation between Durham Regional Police and the Ontario Securities Commission.

Police allege Pleterski solicited funds from investors, promising massive profits and guaranteeing no losses from their original investment. When investors couldn't access the money they provided to him, many reported the situation to police. None of the charges have been tested in court.

The bankruptcy trustee's investigation previously found that Pleterskiinvestedless thantwo per cent of the investors' funds while spending nearly $16 million on himself —renting private jets, going on vacations, adding luxury cars to his collection and leasing to buy a lakefront mansion prior to his bankruptcy.

WATCH | Details of 18-month police investigation into 'Crypto King':

Pleterski says he invested funds

In his affidavit, Pleterski denies that he only invested about two per cent of the investors' funds.

Instead, he says that while investing in cryptocurrency he issued investor payouts by allowing new investors to take over the position of outgoing investors in his cryptocurrency accounts to avoid paying currency transaction fees.

"New investors took the place of these 'first investors'in the cryptocurrency accounts, and so their money was invested," Pleterski said. "lt was just invested without losing money as part of the currency exchange."

The trustee has repeatedly stated that Pleterski has not provided any evidence to support the claim that the value of cryptocurrency accounts ever exceeded the $2.4 million USdeposited in 2021.

In court, Williams said Pleterski has provided no evidence of the assignment of funds as he described in his affidavit and said that "paying out investors with new investor fundsis the definition of a Ponzi scheme."

Pleterski's lawyer, Micheal Simaan, told the court his client's lack of record keeping needs to be considered in the context of his age and so does how he spent large sums of money.

"He did the thing that dumb teenagers and dumb young adults do:he didn't keep accounts," said Simaan. "He didn't know what to do with [the money]so he bought toys — Lego and fast cars."

Simaanalso said Pleterski had no ill intent.

"He wasn't here trying to make off with as much money as he could and run away from the investors," said Simaan.

"He could have. He didn't."

Fears for safety ignored, saysPleterski

In his affidavit, Pleterski also attributes the trustee's allegations that he has not co-operatedwith the bankruptcy proceeding to concerns for his safety, which Pleterski says heraised and the trustee ignored.

One of Pleterski's investors, Akil Heywood, who'd been appointed one of the inspectors on the bankruptcy (a role that guides the bankruptcy investigation) was charged last year with Pleterski's alleged kidnapping, forcible confinement and assault in December 2022.

"lt is disappointing that reviewing [the trustee's] reports would not permit you to know what at least one of their inspectors did to me," said Pleterski, in his affidavit.

"That I had told them that I was concerned about it from the outset; and that they had ignored my concerns."

Williams told the court Pleterski"is blaming everyone else for his own wrongdoing."

"He chose the people he took money from," she said."This is of his own making. The trustee never disclosed where Mr. Pleterski was staying."

Heywood was removed as an inspector and was also charged with threatening a representative from Grant Thornton overseeing the bankruptcy. He previously told CBC Toronto he is innocent. The charges against him have not been tested in court.

In his affidavit, Pleterski also suggests the criminal court system is the place to forpunitive measures against him if he's convicted, not the bankruptcy process.

His lawyer furthered those arguments in court, and Justice Black raised the possibility of continuing Pleterski's bankruptcy until the criminal case against him is resolved. The lawyers for the trustee and Pleterskidid not oppose that option.

Undisclosed Steam accounts

The trustee also found records of hundreds of thousands of dollars worth of transactions made through one of Pleterski's accounts on Steam— the online game storefront. The funds came fromone of two accounts the trustee discovered through a court order. Pleterski had previously disclosed three Steam accounts.

Information on one of those accounts, "Tersk32," revealed that Pleterski changed its password, associated email address and added a new phone number on the same day the trustee obtained the court order, according to the trustee's court filing.

"I assume Mr. Pleterski assumed that would be enough so we would not get access to that information. Clearly, he was mistaken," said Williams in court Wednesday.

The trade history for that account showed that from the time Pleterski was forced into bankruptcy until December 2023 he conducted over 100 trades, selling at least 153 "Steam skins," which are largely virtual weapons for online games.

Williams said that one account provides evidence that Pleterski liquidated more than $430,000 in digital assets.

Justice Black asked Pleterski's lawyer to address the allegations on Wednesday. Simaansaid he's been unable to get in touch with his client since he reviewed the trustee's filing on the Steam information.

"It's hard to imagine a great response to it," Simaan told the court. "Misguided as it may be, there is a lack of trust between Pleterski and the trustee."

$6K formanaging OnlyFans creators

The trustee also said it was informed by Durham Regional Police last month that Pleterski started providing account management services to OnlyFans users earlier this year, and that policeconnected the trustee to one of his clients.

The trustee says it was told Pleterski is charging clients 40 per cent of their earnings from the subscription-based site, which mostly features p*rnography, for his services and that this source of income was never disclosed to the trustee.

Bank records show Pleterski collected more than $2,200 from at least two clients by e-transfer from April to early June, according to the trustee's court filing. And the trustee said one of Pleterski's clients told them they'd paid Pleterski more than $6,000 between April and May this year, most of which isn't reflected in bank statements.

In court, Williams allegedPleterskiis either keeping that cash or putting it in an undisclosed bank account.

"Pleterski lies in his affidavit when he says he's not earning any income — that is simply not true," said Williams.

"It is abundantly clear that Mr. Pleterski has no remorse for his actions and intends to continue to commit fraud."

For that reason, Williams told the court, conditions are needed on any sort of discharge for Pleterski.

"We don't want more victims," she said. "The whole point of this is to prevent more victims."

Justice Black said he was likely to issue his decision on whether to dischargePleterski'sbankruptcy within the next couple of days.