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Ontario Securities Commission (OSC) Continues Crypto Crackdown

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The digital assets sector being compared to the ‘wild west’ will soon be thing of the past in Canada, as the nations regulators continue their crackdown in earnest on non-compliant exchanges.  The following are the most recent trio of exchanges to find themselves succumbing to a rapidly changing regulatory environment in the ‘Great White North’.

Bybit + KuCoin

The first of two exchanges named by the OSC in a recent enforcement action is Bybit.  The exchange was found to have violated various securities laws with Canada’s most populous province, resulting in a hefty fine and various stipulations moving forward.  The following is a breakdown of what these entailed.

  • $3.2M CAD disgorgement (a repayment of ill-gotten gains)
  • $10,000 CAD legal cost reimbursement
  • A ‘legally enforceable commitment’ which will see Bybit bring its operations within regulatory compliance with the OSC
  • Temporary pause on new Ontario-based accounts

The other exchange name in the aforementioned announcement is KuCoin.  Unlike ByBit however, the OSC states that KuCoin opted to ignore communications with the regulator.  The result of this decision? “The OSC successfully obtained orders permanently banning KuCoin from participating in Ontario’s capital markets and requiring KuCoin to pay an administrative penalty of CAD $2,000,000 and a further $96,550.35 towards the costs of the OSC’s investigation.”

In the case of both Bybit and Kucoin, the OSC alleges that the exchanges “allowed Ontario investors to trade securities without a prospectus or any exemption from the prospectus requirements”.

OSC Director of Enforcement, Jeff Kehoe, relayed a clear and stern message to all other exchanges not operating in a compliant manner, stating, “Foreign crypto asset trading platforms that want to operate in Ontario must play by the rules or face enforcement action…The outcomes announced today should serve as a clear indication that we refuse to tolerate non-compliance with Ontario securities law.”

Bittrex

While not involved with the latest enforcement action taken by the OSC, Bittrex Global officially announced in late May that it would soon be shuttering its services within Canada.  The popular exchange noted that its decision was made, “In light of regulatory developments” within the nation, and that it was “…required to take steps to restrict access to certain products on its platform by Canadian users”.  That time is now fast approaching, with access set to be revoked on June 28th, marking yet another exchange that will be inaccessible to residents of Ontario.

Playing by the Rules

This situation has no doubt arisen due to the same issues the aforementioned exchanges are now facing.  Despite the current market slump, digital assets continue to ingrain themselves in the mainstream.  Nothing can change that, as more services and regulations are continually being fleshed out.  It also means that the free ride experienced by exchanges over the past decade, devoid of any real oversight, is fast coming to a end.  ByBit, KuCoin, Bittrex, and scores of others can now all attest to this as they revamp their target demographics and services on offer.

While many exchanges continue operating without being registered, there is a growing list of others that have decided to play nice with the OSC.  As it stands, the only exchanges which have been granted “exemptive relief to offer crypto products to investors in Ontario” include,

  • Bitbuy Technologies
  • Bitvo
  • Coinberry
  • Fidelity Digital Assets
  • Netcoins
  • CoinSmart
  • VirgoCX
  • Wealthsimple

 

Joshua Stoner is a multi-faceted working professional. He has a great interest in the revolutionary 'blockchain' technology. In addition to this, he is a licenced Paramedic in Nova Scotia, Canada. As such, he can provide emergency care/medicine to any situation necessitating it.

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