Binance Sued in Canada for Allegedly Breaching Securities Laws
The largest superior trial court in Canada, Ontario’s Superior Court of Justice, has filed a class action lawsuit against one of the leading cryptocurrency exchanges, Binance, for allegedly failing to comply with necessary registrations and prospectus filings as stipulated by securities regulations.
According to a court statement as seen on Advisor.ca, Plaintiffs Christopher Lochan and Jeremy Leeder allege that Binance violated the Ontario Securities Act (OSA) by selling crypto derivative products to retail investors without registration, violating securities laws.
The class action lawsuit against the firm seeks both damages and rescission of these trades. The court noted the plaintiff's claim in its ruling that the sales were illegal and void for lack of the required registration.
Furthermore, the court recognized that crypto contracts are considered securities or derivatives under current regulations, and selling them qualifies as distribution. As a result, the court found the plaintiffs have a case against the crypto platform.
Nevertheless, none of the allegations against the crypto trading platform Binance Holdings Ltd. have been proven.
This is just one of the many troubles Binance has been facing in Canada. Through the last few years, the exchange has faced court battles with Canadian provincial regulators.
Previously, Binance had already been found by Ontario courts to have made available to Canadian users access to the Binance website platform.
In mid-2021, after careful and detailed examination by the Ontario Securities Commission (OSC), Binance agreed to stop dealing with Canadian investors, and in early 2022, the firm committed to an undertaking with the OSC, promising to ban investors in Ontario from trading on the platform and gradually halt its operations.
Binance received a compliance warning from the Ontario Securities Commission. Instead of complying with securities law or facing regulatory scrutiny, Binance seemingly opted to pull out of Ontario.
However, a few weeks before the platform was to wind down operations, Binance overturned that commitment, stating that it is authorized to operate as a money service business and hence is allowed to continue operating in the province.
In 2023, an ongoing investigation of possible regulatory breaches by the industry’s giant began by OSC, and the court said no allegations against the firm have been brought forward.
The court also rejected Binance's argument that it merely processed trades between investors without acting as a direct party. The Ontario court stated that the only contracts in the record are between Binance and class members.
Per the court decision, investors who purchased cryptocurrency derivative contracts from Binance since September 13, 2019 are eligible to join the class action, as this paves the way for the evaluation of damages, interest, and costs on a class-wide basis.
Many of the Binance Canadian users and investors—more than half—are reportedly holding over $5,000 in cryptocurrency investments. While Binance stopped its operations in Canada in May 2023, local regulators have continued to crack down on the exchange.
Disclaimer: This information should not be considered financial advice by any means. Please do your own research before making any investment decisions. The views in the articles are personal opinions only. Whale Insider is not responsible for any financial losses incurred.