Cryptocurrency behemoth Binance is facing intense legal scrutiny in Canada as a new class-action lawsuit alleges the company has been operating in violation of local securities laws. The Ontario Superior Court of Justice has recently acknowledged a motion to certify a lawsuit accusing Binance of offering cryptocurrency derivatives to retail investors without proper registration.
Filed by representatives Christopher Lochan and Jeremy Leeder, the lawsuit contends that Binance’s activities contravene both the Ontario Securities Act and federal regulations. The legal action demands both damages and the nullification of what it claims are illegal derivatives transactions, highlighting that a significant number of Canadian crypto traders, many of whom are retail investors, could be affected.
The contention stems from the assertion that over half of Canada’s cryptocurrency owners have investments exceeding $5,000. This lawsuit emerges just as Binance holds a dominant position in the global crypto market, reportedly accounting for 58% of all spot trading volumes among centralized exchanges as of March 2024. Additionally, it operates the largest derivatives platform, outpacing competitors like Bybit and OKX.
This legal challenge is not Binance’s first regulatory hurdle. The exchange previously announced an exit from Ontario in June 2021 following a regulatory warning, only to face further actions from the Ontario Securities Commission (OSC) in 2022. Despite an official announcement to cease Canadian operations entirely by May 2023, the OSC’s investigations into Binance’s activities continue.
At the time of this report, Binance has not responded to requests for comment on the ongoing legal proceedings in Ontario. This lawsuit underscores the increasing regulatory scrutiny facing the cryptocurrency industry, particularly regarding compliance with local securities laws.