OSC imposes fines, market ban in few cases of crypto trading

OSC tackles ‘non-complaint’ crypto asset trading platforms

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The Ontario Securities Commission has landed two successful enforcement cases in a crackdown on “non-complaint” crypto asset trading platforms: a settlement with Bybit Fintech Ltd. sanctions.

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“Foreign crypto-asset trading platforms wishing to operate in Ontario must abide by the rules or undergo enforcement action,” said Jeff Kehoe, director of enforcement at OSC, Canada’s largest capital markets regulator. “The results announced today should be a clear indication that we refuse to tolerate non-compliance with Ontario’s securities law.”

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

The regulator obtained orders permanently banning KuCoin from participating in Ontario’s capital markets and requiring the company to pay a $2 million administrative fine, plus $96,550.35 for the costs of the OSC’s investigation.

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Bybit settled with the OSC, agreeing to shell out US$2,468,910 and pay an additional $10,000 towards the cost of the investigation.

Unlike KuCoin, Bybit responded to the OSC’s enforcement action, maintained an open dialogue, provided the requested information and pledged to participate in registration conversations.

Bybit has also made a commitment or “legally enforceable undertaking” to the OSC to take steps to reconcile its operations.

In addition, while the registration talks are ongoing, Bybit confirms that it will not accept new accounts for Ontario residents, offer new products to existing accounts of Ontario investors, or engage in marketing and promotional activities aimed at residents of Ontario,” the spokesperson said. according to OSC.

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“If registration talks fail, Bybit confirms it will end its Ontario operations.”

Existing retail Ontario investors will need to reduce their exposure to certain restricted products, such as leveraged, margin or lending contracts. The OSC said any funds or assets held in the accounts of Ontario retail investors can be used for non-restricted products or be withdrawn from the Bybit platform.

The OSC issued a warning in March 2021 requesting crypto-asset trading platforms offering derivatives or securities trading in Ontario to contact the regulator by the next month to begin registration discussions or take enforcement action.

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

The OSC thanked the British Virgin Islands Financial Services Commission for their assistance in the Bybit case and the Seychelles Financial Services Authority for their assistance in the KuCoin case.

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