Global fintech and funding innovation ecosystem
April 23, 2024   Blockchain, Crypto, Digital Assets Regulations, Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Metaverse, NFTs, Enterprise, FinTech and Alternative Finance, Fundraising, Investing, Trading, Legal Issues, Regulation, Consultation, Online Funding / Investing Portals, Regtech, Compliance, Governance, Stories   No comments

Canadian Investors Lead Class Action Against Binance Canada

Binance | April 23, 2024

Freepik lawsuit - Canadian Investors Lead Class Action Against Binance Canada

Image: Freepik

Binance is facing a class action lawsuit from Canadian investors seeking damages and recission

  • Binance (Binance Holdings, Binance Canada Capital Markets, and Binance Canada Holdings) is facing a class-action lawsuit in Ontario, Canada for selling crypto derivatives to retail investors without proper registration, a violation of local securities laws.
  • On April 19, 2024, Ontario's Superior Court (a different 'OSC') published the motion and provided a detailed analysis of whether the sale of cryptocurrency derivatives by Binance constituted a sale of securities under the law, emphasizing the complexity and risks associated with these products.

See:  U.S. Court Orders Binance CZ to Surrender Canadian Passport

  • The motion highlighted that a large portion of Canadian crypto asset owners are retail investors, with over half owning less than $5,000 in the market, a vulnerable demographic to risks associated with non-compliance by platforms like Binance.  The motion was certified as a class action, allowing it to proceed on behalf of all affected Canadian investors.
  • The plaintiffs who initiated the lawsuit to be Christopher Lochan and Jeremy Leeder, are seeking damages for the losses incurred due to Binance’s alleged illegal activities. They are also asking for rescission of the transactions, which would effectively annul the contracts made under these conditions and potentially refund the investors.

"The sale of a cryptocurrency derivative has been held to be a sale of an 'investment contract' and, therefore, of a security within the meaning of section 1(1) of the OSA.  A person or company must be registered under Ontario securities law to engage in the business of trading in securities unless an exemption applies."

What Happened?

The broader regulatory environment in Canada became more restrictive after the Canadian Securities Administrators (CSA) introduced new guidelines in February 2023 outlining enhanced investor protection expectations for crypto platforms. These guidelines were especially stringent regarding the handling of stablecoins, requiring crypto exchanges to obtain prior approval before allowing customers to buy or deposit stablecoins. The approval process involved due diligence checks that Binance was unwilling to do, citing the unfeasibility of these new regulations.

See:  Binance Withdraws from Canadian Market due to Tightened Crypto Regulations

Following warnings from the Ontario Securities Commission (OSC), despite its significant market share and influence in the global cryptocurrency market, Binance announced its decision to exit the Canadian market in May 2023. Despite declaring an end to its services in Ontario, the platform remained accessible to some residents, leading to increased regulatory interventions.

In Closing

If Binance does not respond to the lawsuit, the court may issue a default judgment in favor of the plaintiffs. This would mean that the court accepts the claims of the plaintiffs as uncontested, potentially leading to a legal order for Binance to pay damages or fulfill other remedies sought by the plaintiffs without Binance’s input in the decision.

NCFA Jan 2018 resize - Canadian Investors Lead Class Action Against Binance CanadaThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Canadian Investors Lead Class Action Against Binance CanadaFF Logo 400 v3 - Canadian Investors Lead Class Action Against Binance Canadacommunity social impact - Canadian Investors Lead Class Action Against Binance Canada

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Canadian Investors Lead Class Action Against Binance Canada




 

Leave a Reply

Your email address will not be published. Required fields are marked *

5 × 2 =