The leading global crypto exchange Binance has been named defendants in a class action suit that is currently ongoing in Canada. The regulator sought to show that the company breached securities laws in relaxed jurisdictions by selling crypto derivatives without getting prior approval. The Ontario Superior Court of Justice, admitted the certification motion on the 19th of April, which is attributed as the first step of the legal action against the exchange.
Consequently, defendants (represented by Christopher Lochan and Jeremy Leeder) have brought an action against Binance for violating the Ontario Securities Act (OSA) and federal rules and regulations. The lawsuit could result in major changes for Binance in this market and would likely directly affect users in Canada.
Retail investors central to Binance case
In the claims document, it has been stated that “Binance bypassed the entire registration process by dispensing exchange-traded crypto derivatives to Canadians without their knowledge of the country’s digital asset guidelines.” In the statement, applicants also said that the exchange platform was in the red of the rule prohibiting practices that could adversely affect investors within the set of regulations by the country. The legal action entails a damage award and on-again-off-again going of all the trades, which are said to be in contravention of Canadian law.
The report states that tens of thousands of Canadians have invested and allocated their funds to these vehicles on the Binance platform. This procedural point makes it clear that the majority of traders are buying and selling derivatives rather than purchasing digital coins. It mentions that this figure surpasses 50% of Canadians allegedly owning at least $5,000 worth of digital assets.
OSC intensifies scrutiny on Binance operations
Binance is also a big player in crypto trading and the most solid worldwide derivatives marketplace between centralized exchanges. At the start of that month, trading volumes on the platform reached up to 58% of the total spot market trade volume. Binance, along with its OKX and Bybit rivals, has pragmatically amassed all the dominance in the centralized derivatives market.
Ontario thus would become the second Canadian province after Quebec to ban crypto trading for its residents, whose prosecution would interfere with the ban put into place by Binance in mid-June 2021. The choice to go 5 months was the OSC’s inspiration after it passed a formal warning to the company. However, this announcement did not stop Binance’s operations, giving the regulator another reason to send its basic notice to the exchange in early 2022.
Binance, despite that, had been involved in a legal issue even after the company announced its departure from the Canadian market on May 17th, 2023. Aside from that, it is worth highlighting that OSC’s case, which brought the company Binance back to the regulatory focus, illustrates keeping the regulatory integrity within the cryptocurrency industry. In the wake of such incidents, the industry participants are likely to be more subject to control measures, for which regulators are to safeguard investors from cryptocurrency volatility-related risks.
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