OSC metes out penalties, market ban in pair of crypto buying and selling instances

Home business OSC metes out penalties, market ban in pair of crypto buying and selling instances
OSC metes out penalties, market ban in pair of crypto buying and selling instances
OSC metes out penalties, market ban in pair of crypto buying and selling instances

OSC cracks down on “non-violating” crypto-asset buying and selling platforms

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The Ontario Securities Commission has dropped two successful law enforcement cases in a crackdown on crypto-asset trading platforms “no complaint”: a settlement with Bybit Fintech Ltd. The Capital Markets Court ruled against KuCoin imposing a permanent ban on the market and “significant” cash penalties.

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“Crypto-asset trading platforms that wish to operate in Ontario must comply with the rules or face enforcement action,” said Jeff Kehoe, executive director of OSC, Canada’s largest capital markets regulator. “The outcomes introduced at the moment ought to function a transparent indication that we don’t tolerate non-compliance with the Ontario Securities Act.”

The OSC said that both Bybit and KuCoin operate unregistered crypto-asset trading platforms, “and allow Ontario investors to trade securities without a prospectus or any exemption from prospectus requirements.”

The regulator has obtained orders permanently barring KuCoin from participating in the capital markets in Ontario and requiring it to pay a $2 million administrative fine, plus $96,550.35 to cover the costs of OSC investigation.

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Bybit settled with OSC, agreeing to give away $2,468,910 and pay an additional $10,000 for the cost of the investigation.

“Unlike KuCoin, Bybit has responded to OSC enforcement actions, maintained open dialogue, provided requested information, and committed to participating in registration discussions,” the regulator said.

Bybit also gave a pledge, or “legally enforceable obligation” to the OSC, to take steps to make its operations compliant.

“In addition, during registration discussions, Bybit confirms that it will not accept new accounts for Ontarians, will not offer any new products to existing accounts held by Ontario investors, or engage in any marketing and promotional activities targeting Ontarians,” the OSC said.

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“If registration discussions fail, Bybit confirms that it’s going to finish operations in Ontario.”

Existing retail investors in Ontario will be required to liquidate their positions in certain restricted products, such as contracts that include leverage, margin or credit extension. The OSC said that any funds or assets remaining in Ontario retail investor accounts can be used for unrestricted products or withdrawn from the Bybit platform.

In a statement, Bybit founder and CEO Ben Zhou said it has always been “the corporate’s main goal to function … in compliance with all related guidelines and laws in Ontario.”

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He added that Bybit took immediate steps to cooperate with the OSC upon being notified of the release of the statement of allegations, and said the registration and compliance process had begun.

“We appreciate the efforts of the OSC in protecting Ontario investors and look forward to collaborating with OSC in all aspects of the registration process,” Chu said. “As cryptocurrency adoption becomes mainstream, it is crucial for us to provide next-level trading experiences to all crypto believers.”

The OSC issued a warning in March 2021 telling crypto-asset trading platforms that offer derivatives or securities trading in Ontario to contact the regulator by the following month to begin registration discussions or face enforcement action.

“Despite this warning, Bybit and KuCoin did not contact OSC by the deadline and continued operations in Ontario,” the OSC said on Wednesday.

The OSC thanked the BVI Financial Services Commission for its assistance in the Bybit case, and the Seychelles Financial Services Authority for its assistance in the KuCoin case.

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