Binance, a leading player in the cryptocurrency trading industry, has been hit by a class-action lawsuit in Canada. The Ontario Superior Court of Justice has greenlighted a lawsuit alleging that Binance violated securities laws by selling crypto derivatives products to retail investors without proper registration. [1],
The plaintiffs, represented by Christopher Lochan and Jeremy Leader, argue that Binance’s actions were in violation of the Ontario Securities Act and federal law. They claim that Binance failed to register in accordance with securities law and neglected to file prospectuses for derivative products it sold to Canadian investors. [2],
The certification motion for the class-action lawsuit highlights the significant presence of retail investors in cryptocurrency derivatives trading in Canada. According to the Ontario Securities Commission (OSC), more than 50% of Canadian crypto owners hold at least $5,000 worth of cryptocurrency. [2], This underlines the potential impact of the lawsuit on a large number of investors.
The plaintiffs demand compensation and cancellation of the illegal derivatives trades made on the Binance platform. They argue that Binance’s failure to comply with registration requirements and file a prospectus renders the sale illegal and invalid. [2],
Regulators have previously classified crypto contracts as securities or derivatives, bringing the marketing of such contracts under securities law. This classification has increased scrutiny of platforms like Binance, which offer crypto derivatives products to retail investors. [2],
Binance’s history with Canadian investors has already drawn regulatory attention. Despite previous pledges to stop trading with local investors in 2021 and a settlement with the Ontario Securities Commission (OSC) in 2022, Binance is still under investigation for potential violations. [2], The outcome of this lawsuit could have a significant impact on the cryptocurrency industry, particularly in terms of regulatory oversight and investor protection.
It is estimated that thousands of Canadian users were affected by Binance’s alleged breaches. The plaintiffs argue that Binance’s actions not only violated securities laws, but also directly impacted retail investors who purchased crypto derivatives contracts from the platform starting on September 13, 2019. [3],
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