Ontario's Superior Court of Justice has certified a class action lawsuit against Binance, according to a report by Advisor.ca. The lawsuit alleges that Binance Holdings Limited violated securities law by offering crypto derivative products to retail investors without proper registration.
Regulatory Scrutiny
This latest development occurred amid increasing scrutiny from regulatory authorities, including the Ontario Securities Commission (OSC). In 2021, Binance promised to cease operations with Canadian investors in response to the OSC's scrutiny and later agreed to an undertaking with the OSC to halt trading activities in Ontario. However, the OSC's investigation into possible regulatory breaches by the exchange is ongoing, with no formal allegations yet made against the company.
The court noted that regulators have previously categorized crypto contracts as securities or derivatives, suggesting that the marketing of such contracts falls under securities law. This classification paves the way for the plaintiffs' claims of violation of securities law againstBinance. Moreover, the court dismissed Binance's argument that it was merely a facilitator of trades between users, highlighting evidence that investors traded directly with Binance.
Investors who purchased cryptocurrency derivative contracts from Binance starting September 13, 2019, are considered members of the class affected by the lawsuit. The case highlights the importance of regulatory compliance and investor protection in the rapidly evolving cryptocurrency trading landscape.
Binance Faces Regulatory Pressure in Canada
Last year, Binance terminated its operations in Canada due to stringent regulations, particularly concerning stablecoins. Canada's regulations regarding cryptocurrencies took a new turn when the Canadian Securities Administrators classified stablecoins as "securities and/or derivatives."
This action barred regulated crypto exchanges from offering services involving stablecoins, a significant component of the crypto market. Additionally, the province of Ontario mandated the registration of all cryptocurrency exchanges operating within its jurisdiction.
Binance, acknowledging the evolving regulatory landscape, cited the new guidance related to stablecoins and investor limits as the main reason for its exit from the Canadian market. The exchange emphasized that the regulatory environment in Canada had rendered its operations untenable.
Binance is not alone in its departure from Canada. Other prominent crypto exchanges, including Paxos and OKX, have opted to end their services for Canadian users due to regulatory pressure. However, exchanges such as Gemini, Coinbase, and Kraken are actively seeking authorization to strengthen their presence in the region.
This article was written by Jared Kirui at www.financemagnates.com.
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