April 23, 2024
Canada Sues Binance Over Securities Law Breaches
Latest Cryptocurrency News

Canada Sues Binance Over Securities Law Breaches

Binance, a prominent cryptocurrency exchange, finds itself embroiled in legal trouble yet again as it confronts a class-action lawsuit in Canada. Ontario’s Superior Court of Justice disclosed a certification motion on April 19, initiating proceedings against Binance. The lawsuit contends that Binance violated local securities laws by offering crypto derivative products to retail investors without proper registration.

Source: Ontario’s Superior Court of Justice

Allegations and Legal Proceedings

Represented by Christopher Lochan and Jeremy Leeder, the plaintiffs assert that Binance’s sale of crypto derivative products contravened the Ontario Securities Act (OSA) as well as federal regulations. The lawsuit seeks both damages and the rescission of unlawful derivatives trades. It’s claimed that a substantial number of Canadian users engaged in Binance’s cryptocurrency derivatives offerings, highlighting the broad impact of the alleged violations.

The certification motion underlines the prevalence of retail investors in cryptocurrency derivatives trading, citing data from the Ontario Securities Commission (OSC). According to OSC figures, over 50% of Canadian crypto owners hold investments of at least $5,000 in the market. This underscores the significance of the alleged infractions and their potential impact on retail investors.

Binance’s Market Dominance and Regulatory Scrutiny

Binance stands as a dominant force in the global cryptocurrency exchange landscape, commanding 58% of total spot trading volumes among centralized exchanges as of March 2024. Notably, its derivatives market is particularly extensive, surpassing competitors such as Bybit and OKX. Bybit’s data underscores Binance’s overwhelming presence in the derivatives market for centralized exchanges (CEXs).

Trading volumes changes of Binance, OKX, Bybit and other platforms between October 2023 and March 2024. Source: Bybit

The legal action against Binance comes in the wake of prior regulatory engagements. In June 2021, Binance announced plans to discontinue operations in Ontario after receiving a warning from the OSC. Despite this announcement, the OSC notified Binance in early 2022 of its intent to pursue a cease trade order due to alleged non-compliance. Despite Binance’s announced exit from Canada in May 2023, regulatory scrutiny continued, with the OSC investigating the exchange further.

Binance’s Response and Ongoing Developments

Efforts to obtain comment from Binance regarding the Ontario lawsuit yielded no response. The ongoing legal actions highlight regulatory complexities in cryptocurrency exchanges, especially regarding derivatives and securities compliance. Further developments may illuminate industry-wide regulatory challenges.

Image by vecstock on Freepik

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