Binance, the well-known cryptocurrency exchange platform, is currently at the heart of a legal controversy in Canada. Despite announcing its departure from the country in May 2023, local authorities continue to conduct rigorous investigations against it. This has led to a class action accusing Binance of violating local securities laws.
Case background
The Ontario Superior Court of Justice issued a motion for certification of a class action against Binance on April 19. According to the plaintiffs, represented by Christopher Lochan and Jeremy Leeder, the platform allegedly sold cryptocurrency derivatives to retail investors without the registration required by the Ontario Securities Act (OSA) and federal legislation. This legal action seeks damages as well as the cancellation of the illegal derivative transactions. It should be noted that many Canadians have invested in these derivatives via the Binance website, with the plaintiffs arguing that over 50% of cryptocurrency holders in Canada own at least $5,000 in the market.
Impact and Presence of Binance
Binance is not only a major player in the cryptocurrency market, but also dominates the derivatives market among other exchanges such as Bybit and OKX. According to data from Bybit, Binance, OKX and Bybit “almost entirely dominate” the centralized derivatives exchange (CEXs) market. Between October 2023 and March 2024, the trading volumes of Binance, OKX and Bybit showed significant fluctuations, demonstrating the volatility and dynamics of the cryptocurrency market.
Legal consequences and reactions
This new legal action comes a few years after Binance announced in June 2021 its intention to cease operations in Ontario following a warning from the OSC. However, despite this announcement of departure in May 2023, local authorities intensified their pressure on the exchange. “The OSC's investigation of the defendants is ongoing,” the court document states. To date, Binance has not responded to requests for comment regarding this legal action.
Conclusion
The Binance case raises important questions about the regulation of cryptocurrency platforms and their compliance with local securities laws. As the cryptocurrency market continues to grow and attract new investors, the need for adequate legal protections and transparency becomes increasingly crucial. This case could serve as a precedent for future regulation and legal action in the cryptocurrency industry, not only in Canada but also in other jurisdictions.
