The largest cryptocurrency exchange, Binance, was recently accused by the regulator of Canada of violating securities laws by selling cryptocurrency derivatives not registered in the country. The company has been named as a defendant in an ongoing class action lawsuit in Canada. On April 19, the Ontario Superior Court of Justice admitted the certification motion.
The plaintiffs (represented by Christopher Lochan and Jeremy Leeder) filed suit against the exchange for violating the Ontario Securities Act (OSA) as well as federal rules and regulations.
The defendant, Binance Holdings Limited (“Binance”), a Caymen Islands company, describes itself as the world's largest crypto asset trading platform: Binance Holdings Limited. From 2019 to 2023, directly or through its Canadian subsidiaries (the other two Defendants), Binance, together with the other two Defendants, marketed and sold cryptocurrency derivatives contracts on its website to Canadian retail investors,” reads part of the document.
The class action highlighted that the company should be sued for damages and termination of its contracts under section 133 of the Ontario Securities and at common law, also alleging that the “sales were unlawful and void due to the Defendants' failure to register as required by OSA or in presenting a prospectus”.
O document also highlighted that “after some discussion with the OSC team, Binance announced in June 2021 that its operations would cease in Ontario effective December 31, 2021. As a result of its failure to adhere to this announced cessation of sales, in the In early 2022, OSC notified Defendants of its intention to seek a cease trading order.”
It is worth remembering that Binance announced, on May 12, 2023, its exit from Canada amid regulatory heaviest in the sector in the country. According to the exchange at the time, the move was related to new guidance on stablecoins and investor limits provided to cryptocurrency exchanges and thereby making “the Canadian market unsustainable for Binance at this time.”
