Binance regulatory compliance woes seem to worsen amid efforts to mitigate it by the exchange's new CEO, Richard Teng, who is bent on restructuring the trading platform's statutory conformity concerns.
Despite exiting the Canadian market around mid-2023, local authorities in the North American nation are still investigating the exchange, culminating in a recent lawsuit against the trading platform.
Last week, particularly on April 19, the Superior Court of Justice, situated in Canada's second-largest province, Ontario, released a certification motion against Binance, accusing the exchange of selling crypto derivation products to retail customers without registration; an action that violates the Ontario Securities Act (OSA) and federal law.
Lawsuit Details
According to the class action, the Plaintiffs, on behalf of the retail purchasers of the cryptocurrency derivatives Binance offers, are suing for “damages and rescission of their contracts under section 133 of the Ontario Securities Act, RSO 1990, c. S.5 (“OSA”).”
The plaintiffs' legal representatives, Christopher Locan and Jeremy Leeder, argued that because Binance had failed to register under the OSA or to file a prospectus, the exchange's cryptocurrency sales were illegal and void.
Additionally, they pointed out that under the OSA, cryptocurrency derivatives contracts have initially been regarded as securities and investment contracts, solidifying the claim that Binance’s trades contain all the elements common to investment contracts, hence the need for registration.
However, the Plaintiffs acknowledged that they are only but two out of tens of thousands of Canadian Binance website users who invested in cryptocurrency products and who claim that those products were sold illegally.
Hence, they added that Canadian traders who believe they should be part of the lawsuit can contact the legal team for more information.
Per the class action, traders who qualify to partake in the lawsuit are persons in Canada who purchased cryptocurrency derivative contracts from Binance from September 13, 2019, to the date of the court action certification.
Regulatory Compliance Challenges Getting Worse?
Noteworthily, this is not Binance’s first time dealing with the legal system in Canada, nor is it the only legal system it is currently dealing with.
Binance is currently being accused of tax evasion and money laundering worth over $35 million by the Nigerian government's anti-graft agency, the Economic and Financial Crimes Commission, and has recently agreed to pay a penalty fee of $2 million imposed on it by the Indian government following a fall out with the country's Financial Intelligence Unit (FIU).
