Trading cryptocurrency derivatives in Ontario requires special authorization.
According to the regulator, the objective of regulation is to protect investors.
The Securities Commission of Ontario, Canada, accuses the Bybit exchange of alleged violation of the laws of that province, by allowing the trading of derivatives of bitcoin (BTC) and cryptocurrencies to residents in that jurisdiction without having the enabling registry. Recently, the exchanges Poloniex and Kucoin also received similar complaints in Ontario.
The plaintiff considers that Bybit “encourages the inhabitants of Ontario to use the platform and allows the residents of that province to trade securities and derivatives of crypto assets.”
“Bybit’s website indicates that investors can use Canadian fiat currency to buy crypto assets on the Bybit trading platform. Ontario is also not identified in the list of restricted jurisdictions on the website, ”the lawsuit reports.
The court document details that, since April 2021, all cryptocurrency exchanges that offer derivatives or securities trading services to Ontario users must comply with the regulations of that Canadian province. For this reason is that Bybit is affected, although it is based in the British Virgin Islands.
The regulatory body explains that, with this requirement, it is intended that “only duly qualified and appropriate people can participate” in negotiations with this type of product. Derivatives exchanges, in that jurisdiction, are required to provide potential investors a brochure containing information related to the financial assets they offer.
The Securities Commission asks the Judiciary to issue several orders against the exchange. These include fines of C $ 1 million for each violation of the securities law; prohibition of acquiring securities; and return to the Commission any amount of money that Bybit has earned in alleged violation of Ontario laws.
Kucoin and Poloniex, also reported in Canada
As mentioned at the beginning of this article, Bybit is not the first bitcoin exchange to fall into the hands of the Ontario regulator. Last month, a similar accusation fell on Poloniex, fact that was reported by CriptoNoticias. As with Bybit, Poloniex is registered as an exchange outside of Canadian territory (in this case, in the Republic of Seychelles), but that has not prevented the Securities Commission from taking action on the matter, they say, with the in order to protect investors.
Also the Kucoin exchange received accusations, days ago, by the Ontario Securities Commission, for, presumably, not complying with the corresponding registration in that jurisdiction.