Binance, the leading players in the cryptocurrency trading industry, has been hit with a class-action lawsuit in Canada. The Ontario Superior Court of Justice has given the green light to the lawsuit, which alleges that Binance violated securities laws by selling crypto derivative products to retail investors without proper registration [1].
The plaintiffs, represented by Christopher Lochan and Jeremy Leeder, argue that Binance’s actions were in violation of the Ontario Securities Act and federal law. They claim that Binance failed to register as required by securities law and neglected to file a prospectus for the 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), over 50% of Canadian crypto owners hold at least $5,000 worth of cryptocurrency [2]. This underscores the potential impact of the lawsuit on a large number of investors.
The plaintiffs seek damages and the rescission of the unlawful derivatives trades conducted on the Binance platform. They argue that Binance’s failure to comply with registration requirements and file a prospectus renders the sales illegal and voidable [2].
Regulators have previously classified crypto contracts as securities or derivatives, bringing the marketing of such contracts under securities law. This classification has led to increased scrutiny of platforms like Binance, which offer crypto derivative products to retail investors [2].
Binance’s history with Canadian investors has already attracted regulatory attention. Despite previous pledges to cease doing business with local investors in 2021 and agreements with the Ontario Securities Commission (OSC) in 2022, Binance is still under investigation for possible violations [2]. The outcome of this lawsuit could have significant implications for the cryptocurrency industry, particularly in terms of regulatory oversight and investor protection.
It is estimated that tens of thousands of Canadian users were affected by Binance’s alleged violations. The plaintiffs argue that Binance’s actions not only violated securities laws but also had a direct impact on retail investors who purchased the crypto derivative contracts from the platform starting on September 13, 2019 [3].
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- Source: https://Blockchain.News/news/binance-faces-lawsuit-in-canada-for-selling-crypto-derivative-products-without-registration
