Despite Binance’s announcement to withdraw from the Canadian market in May last year, the company continues to face legal troubles in Canada. Recently, investors in Ontario, Canada, collectively filed a lawsuit against Binance, accusing the company of illegally offering cryptocurrency derivatives trading and demanding compensation.
Ontario Superior Court of Justice approved a motion on the 19th to proceed with the class-action lawsuit against Binance. The lawsuit alleges that Binance sold cryptocurrency derivatives to retail investors without proper registration, violating Ontario securities laws and federal laws.
Binance is being asked to compensate for damages. According to FinanceFeeds, the class-action lawsuit seeks compensation from Binance and the revocation of related derivative transactions. It accuses Binance of failing to register and file prospectuses as required by securities regulations. The court, in approving the class-action lawsuit, stated that under current regulations, cryptocurrency perpetual contracts are considered securities or derivatives, and the sale of contracts constitutes distribution. The plaintiffs have fulfilled their evidentiary burden.
Previously, under the scrutiny of the Ontario Securities Commission, Binance promised to cease serving Canadian investors in 2021 and gradually stop operating in Ontario from early 2022. However, just weeks before withdrawing from Ontario, Binance claimed to have successfully cooperated with regulatory authorities and would continue operating in Ontario, only to be refuted by the regulators.
Regarding the class-action lawsuit, Binance claimed that the exchange only facilitates transactions between investors and is not a direct party. However, the court rejected this claim, stating that “the only contracts found in the records are the contracts between the class members and Binance.”
The court’s ruling paves the way for the assessment of damages, interest, and costs in a broad category. Since September 13, 2019, all investors who have purchased cryptocurrency derivative contract products on Binance are eligible to participate in the class-action lawsuit.
Canada Tightens Cryptocurrency Regulation. According to Finance Magnates, Canada has strengthened its regulation of cryptocurrencies in recent years, even prohibiting regulated cryptocurrency exchanges from offering services involving stablecoins. Under strict regulations, Binance announced its withdrawal from the Canadian market last year, and other well-known operators such as Paxos and OKX have also stopped providing services in Canada.
However, exchanges such as Gemini, Coinbase, and Kraken are actively seeking licenses in Canada to expand their local business.
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