Despite Binance’s announcement to withdraw from the Canadian market in May last year, Binance continues to face legal troubles in Canada. Recently, investors in Ontario, Canada have filed a collective lawsuit against Binance, accusing the exchange of illegally offering cryptocurrency derivatives trading and seeking compensation from Binance for damages.
The Ontario Superior Court of Justice approved a motion on the 19th to proceed with the collective lawsuit against Binance. The lawsuit alleges that Binance sold cryptocurrency derivatives to retail investors without being registered, thereby violating the Ontario Securities Act and federal laws.
According to FinanceFeeds, the collective lawsuit seeks damages from Binance and the revocation of related derivative transactions. It accuses Binance of failing to comply with securities regulations by not conducting necessary registrations and filing prospectuses. The court acknowledged the collective lawsuit and stated that under current regulations, cryptocurrency perpetual contracts are considered securities or derivatives, and the sale of these contracts constitutes distribution. The plaintiffs have fulfilled their burden of proof.
Previously, as a result of regulatory scrutiny by the Ontario Securities Commission, Binance pledged to cease serving Canadian investors in mid-2021 and gradually stop operating in Ontario from early 2022. However, just weeks before withdrawing from Ontario, Binance claimed to have successfully cooperated with regulatory authorities and would continue operating in Ontario, only to be refuted by the regulators.
Regarding the collective lawsuit, Binance claimed that it only facilitates transactions between investors and is not a direct party. However, the court rejected this argument, pointing out that “the only contract found in the records is the contract between the collective lawsuit members and Binance.”
The court’s ruling paves the way for the assessment of damages, interest, and costs in a broad category. Since September 13, 2019, all investors who have purchased cryptocurrency derivative contracts on Binance are eligible to participate in the collective lawsuit.
According to Finance Magnates, Canada has strengthened its regulation of cryptocurrencies in recent years, even prohibiting regulated cryptocurrency exchanges from offering services involving stablecoins. Under strict regulations, Binance announced its withdrawal from the Canadian market last year, and other well-known operators such as Paxos and OKX have also stopped providing services in Canada.
However, exchanges like Gemini, Coinbase, and Kraken are currently actively seeking licenses in Canada to expand their local businesses.
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